What are the reasons for launching this Matching Engine in Tokyo?
The primary reason is to better service our latency sensitive clients in Asia which is a key region for us in terms of strong recent and future growth. So, the launch will not only improve the trading experience for clients, it also signals our commitment to the region. Moreover, the launch of our Tokyo matching engine complements the launch in October of GTX’s Matching Engine in London. In that sense, TY3 completes our global ECN network.
What benefits will it bring to GTX’s Asian-based clients?
Clearly it will bring down messaging latency when trading from the region. We expect this will enable liquidity providers to price the platform more robustly, which will enhance the execution quality for participants on both the buy and sell side. A significant segment of our buy-side clients is also interested in trading in a lower latency environment, which the new Matching Engine supports.
Does the new Tokyo-based Matching Engine benefit traders in other regions?
We believe strengthening the diversity and volumes of local liquidity pools will enhance liquidity across the trading day for all GTX market participants. Many clients prefer to trade on our global order book for certain client accounts or strategies. Enhancing liquidity on each regional matching engine will improve the price discovery and liquidity available on the global order book as well.
GTX launched a new Matching Engine in London last October. What spurred the company to expand from a single matching engine in New York to a global network?
Primarily demand from clients located throughout Europe and Asia as well as North America, for a “follow the sun” matching engine network, which optimally supports both local and global order book access. We felt it was important also to position the GTX ECN for its next stage of growth. We always want to ensure we’re doing what’s necessary to improve the liquidity available on the ECN. As mentioned earlier, expanding the diversity and number of market participants on the ECN will enhance it as a global venue for price discovery and trading.
Aside from demand for local or regional Matching Engine access from a trading perspective, are you seeing demand for other GTX products and services as a result of this global expansion?
Very much so. Particularly since SNB, our GTX Direct prime services offering has been an important solution for smaller and medium hedge funds, proprietary trading firms and even banks that found their access to FX prime broker banks curtailed or eliminated. GTX Direct enables these clients to access the ECN on excellent terms by leveraging the prime brokerage relationships of UK and Japan-based units of our parent GAIN Capital. GTX Direct clients are also branching out from trading anonymously on the ECN to setting up direct, disclosed trading structures with bank and non-bank liquidity providers. This route is relatively painless from operational and paperwork perspectives because typically all parties are already live on the ECN and have accounts with GTX Direct entities.
What other steps has GTX taken to support its business within Asia?
We have been expanding through a series of great hires in our offices in Tokyo, Singapore and elsewhere. With the TY3 Matching Engine in place, we have a backlog of exciting clients to onboard and we will be making a concerted push to reach all clients in the region who can benefit by our venues and services.
What other GTX initiatives should we look for in 2017?
We have spent the last year or so building, not only the global Matching Engine network and the GTX Direct business, but also a 24-hour voice agency business as well as a swap execution facility (SEF). With regulations phasing in beginning in a few, short months, we are seeing increased interest in in the registered swap dealer agency and SEF as well as continued sharp expansion of ECN trading volumes. We feel we’ve built a robust “ecosystem” for institutional FX market participants and we expect it to bear fruit this year.