Survival of the Fittest – what’s coming next in the evolution of FX ECNs?

Electronic communication networks may be in the FX market sweet spot right now but Richard Willshire sets out to discover whether they can all survive.

First Published: e-Forex Magazine 61 / FX e-Commerce and Platforms / July, 2015

Institutional FX ECNs seem to meet most market participants’ needs. Some ECN executives suggest that the doubling in FX market turnover in the years 2005 to 2010 and the redoubling in the five years to the $5 trillion a day to date is in no small measure due to the ease of trading that ECNs deliver. Every ECN will argue that they are the best, most effective, most efficient, low cost offering but in the fight for volume, better players will clearly survive while other will inevitably fall by the wayside. So what is the fundamental appeal of the ECN model? Why ECNs? “As a general trend, trading across most major asset classes is moving towards anonymised, lower-latency trading,” says Bill Goodbody, Jr. Senior Vice President, Foreign Exchange at BATS, since March this year owners of the Hotspot FX platform. “This is most obvious in the equities market, which is now fully-automated, but it’s also increasingly the case in the global foreign exchange market. Here, electronic trading...continued

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