Nicholas Pratt
Nicholas Pratt

FX Aggregation: leveraging frameworks for overcoming inefficient trade execution

Pressures within the fragmented FX marketplace are leading increasing numbers of buy and sell-side firms to review, replace and augment their sources of liquidity. Given that so many firms rely on third party aggregation service platforms to provide this liquidity, how are the developers of these aggregation platforms adjusting to these pressures? How are FX aggregation services being customised and tailored to reflect the individual trading strategies and requirements of an increasingly demanding customer base? And how are these same service providers managing to solve the connectivity and compatibility issues that have hindered the provision of aggregation services in the FX market for so many years while at the same time insulating their clients from the cost involved?

There are three factors that are always a big deal in FX – cost, speed and spreads – and these are the same driving forces behind the development of FX aggregation services, says Ric Chappetto, director of business development, forex division at US-based broker PFG Best. “We became an aggregator and instantly got a return on our investment because we were no longer paying aggregators for what we could do in-house. Once the development is in place, you start saving significant amounts of money. Speed is so important because our clients live in a world of nanoseconds. They trade a lot, they trade very quickly in a fast moving market so you have to be able to move very quickly and have to be able to provide the fastest possible executions.” “The final reason in the decision to develop our own aggregation platform,” says, Chappetto, “was the fact that it put us in control of our own environment and the flexibility that gives us. One thing that has helped us in the...continued

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