By leveraging smart order routing and ultra-low-latency execution, platforms continuously identify the best available pricing across venues, reducing slippage and enhancing execution certainty. Real-time price aggregation further strengthens transparency and control for both buy-side and sell-side participants.
The best liquidity platforms are now much more on top of flow quality and are also able to provide a wider range of pricing and order types to facilitate different trading styles.
“For example, alongside the more traditional sweepable and full amount trading styles, a number of ECNs and LPs now offer mid or peg type orders to allow firms to passively exchange risk at a neutral price and the largest bank and non-bank LPs offer sophisticated algorithmic trading suites to facilitate a number of ways to deal,” says Steve Totten, managing director – head of institutional and quantitative products at oneZero.
The defining feature of any advanced liquidity service is customisability.
“A treasury function may have a very different set of needs to a trading desk or payments operation and different LP setups allow participants to optimise for those needs”
Steve Totten
The best solutions go far beyond a simple price feed to provide granular control over how flow is segmented, prioritised and routed. This means being able to configure distinct execution strategies for different client types, flow profiles, or instruments.
Advanced platforms now incorporate intelligent routing logic, adaptive spread and skew management, last-look transparency and dynamic throttling controls explains Andy Biggs, CEO Finalto Trading.
“They allow the user to manage multiple trading venues, liquidity pools and internal crossing mechanisms under a single umbrella with data-driven feedback loops continuously optimising execution,” he says.
Advanced functionality
Features and functionality of advanced FX liquidity services include smart credit management and cost decisions built into analytics, improved system alerting triggering liquidity conversations and pre- and post-trade analytics reporting with pattern recognition and machine learning techniques, along with active disaster recovery solutions.
“Aside from the obvious impact of aggregation, for an institutional FX broker or end client managing their own liquidity stack, diversifying a liquidity offering by integrating multiple liquidity providers is highly beneficial,” says James Husband, head of e-FX trading solutions at Sucden Financial. “Combining tier one and non-bank liquidity with different risk inventories and alpha models adds to both varied and consistent skews. A consideration, however, should be over-aggregation – it is important to prioritise and quantify quality.”
It is important for market participants to have access to differentiated, unique liquidity. Aside from the ability to cope with technical issues or offer credit facilities, providers can specialise in selected currencies or offer more axes into the market at times of day when their local franchise is most active.
“Participants may also have a number of different trading strategies and execution styles,” adds Totten. “For example, a treasury function may have a very different set of needs to a trading desk or payments operation and different LP setups allow participants to optimise for those needs.”
Advanced liquidity management has become fundamental to cost-efficient FX trading. By aggregating liquidity from multiple venues and optimising execution workflows, institutions can significantly reduce transaction costs while enhancing pricing transparency and market access.
“Our clients have demonstrated notable cost improvements – particularly in NDFs and swaps – achieving reductions of up to 40% in execution costs through tighter spreads, reduced slippage and the removal of legacy fee structures,” says Vinay Trivedi, chief operating officer sell side solutions at SGX FX.
Consolidation trend
A key emerging trend is the consolidation of swap and tom/next roll liquidity within centralised aggregation platforms, replacing traditional prime broker workflows and improving efficiency.
Biggs acknowledges that integrating multiple liquidity providers is fundamental at every level of the FX value chain. True price discovery, redundancy and depth can only be achieved when both bank and non-bank liquidity are aggregated intelligently. A diverse set of LPs tightens spreads, reduces market impact and provides greater resilience under stress conditions.
“However, it is equally important to avoid over-aggregation, which can lead to information leakage, fill inefficiency and higher reject rates,” he adds. “Firms should think in terms of primary and secondary aggregation setups, especially if using multiple prime-of-prime or limited aggregation models.”
Being mindful of technology costs and other prime brokerage expenses is crucial. There is a need for cost-effective connectivity solutions that can fully service a diverse client pool – each with different connectivity demands – without compromising on redundancy solutions.
“Tradepoint provides us with a low-latency e-commerce solution, offering cost-effective connectivity to industry-wide venues, with our internal risk framework and credit monitoring built in,” says Husband.
“Combining tier one and non-bank liquidity with different risk inventories and alpha models adds to both varied and consistent skews.”
James Husband
Sucden Financial uses FairXchange’s Horizon for its liquidity management analytics. Horizon’s Sentinel module features an AI-driven alerting framework that utilises machine learning techniques to identify meaningful changes within the trading environment.
“This tool highlights changes in both client trading and liquidity provider behaviour by identifying shifts (structural change) or outliers (anomalous breaks) in trading patterns,” explains Husband. “This is then flagged to us – ranked by a confidence score – whereby we decide what action to take.”
Optimisation benefits
Optimising your setup can have very significant benefits. A trading strategy that is prepared to hold some positions and work orders in the market can execute at mid or even make spread, whilst a strategy that requires immediacy will have to pay for that.
“Working closely with your liquidity providers can improve this even further, as the LP or ECN may be able to adjust pricing if they can identify mutual benefits or opportunities to grow volumes,” says Totten. “For participants that want to access the best possible pricing, providers will also offer a range of technical solutions.”
It is vital that trades are beneficial to both sides of the deal. A simpler approach would be to look at all the trades between a single maker and taker and see if the mark-outs looked reasonable.
“More advanced platforms can use larger data sets and AI to detect much deeper patterns to help optimise subsets of that flow,” explains Totten. “An advanced data platform allows LPs and ECNs to scale to much larger trading volumes and successfully cope with large spikes as we have seen over the course of this year.”
Next-generation liquidity management solutions are increasingly integrating AI and advanced data analytics to enhance efficiency, transparency and execution precision in FX trading.
“We are applying intelligent algorithms to optimise liquidity pooling and smart order routing in real time,” observes Trivedi. “SGX FX’s solutions ensure traders consistently access the best available prices across multiple execution venues with minimal latency.”
Enhanced analytics provide deep insight into liquidity behaviour, volatility dynamics and market structure shifts, enabling proactive risk management and rapid adaptation to changing conditions. The result is a measurable improvement in execution quality, reduced slippage and spreads, streamlined workflow efficiency and more effective hedging and capital deployment.
Technology challenges
Trivedi acknowledges that institutional firms modernising their liquidity infrastructures face significant technology and operational challenges in an increasingly fragmented market environment. “Despite a degree of standardisation, each liquidity venue still typically requires bespoke API integration, which drives up engineering complexity, ongoing maintenance burdens and long-term support costs,” he says. “The lack of standardised data formats and execution protocols further complicates price aggregation and smart order routing, often resulting in higher latency and limited visibility into true market depth.” Operational workflows are also strained by inconsistent fee structures, settlement cycles and counterparty risk frameworks across venues, increasing legal, compliance and risk management overhead.
“In a market that is increasingly electronic, regulated and data-driven, our customers are investing in SGX FX’s scalable, plug-and-play liquidity infrastructure (supported by intelligent automation and unified connectivity), which is essential for institutions aiming to optimise execution quality, strengthen risk controls and maintain strategic agility,” adds Trivedi.
Effective liquidity management is about ensuring sustainable execution across all segregated flow types. By intelligently routing flow based on characteristics such as toxicity, size, or time-of-day behaviour, firms can achieve tighter pricing without compromising on execution quality.
“Optimised routing and reduced reject ratios translate directly into tighter spreads, less slippage and lower transaction costs,” says Biggs. “Centralised liquidity engines provide continuous price calibration, ensuring that the displayed top-of-book reflects true market depth even during volatile conditions.”
Advanced systems link execution data to internal risk frameworks, allowing dynamic hedging and position management at the aggregated level. “The result is not just better pricing, but a coherent and capital-efficient risk management process that benefits the entire dealing ecosystem,” he adds.
Insight complexity
As tick data volumes have exploded, so too has the complexity of extracting insight. Artificial intelligence and machine learning are now helping firms make sense of this data in real time.
“Firms should think in terms of primary and secondary aggregation setups, especially if using multiple prime-of-prime or limited aggregation models”
Andy Biggs
“AI-driven alerting systems can detect anomalies in quote behaviour, rejection rates or response times far faster than traditional rule-based methods,” says Biggs. “Meanwhile, natural language querying and intelligent dashboards are helping to democratise access to analytics, allowing risk managers, dealers and executives to interrogate liquidity performance without needing to write SQL or Python.
Maintaining the infrastructure capacity to cope with record FX volumes while keeping up to date with advances by LPs and ECNs in terms of new order types or enhanced technical protocols is expensive.
Totten observes that oneZero has a team dedicated to managing integration services. “More and more firms, both on the liquidity provision and consumption sides, are finding that a vendor like ourselves can offer significant advantages in terms of cost, faster time to deliver and greater flexibility where a firm can switch in and out of different platforms easily.”
In FX markets, firms adopting advanced liquidity services must navigate complex risk and compliance considerations driven by market fragmentation, growing technology dependencies and evolving regulatory expectations.
“Integrating liquidity across multiple venues and counterparties – enhanced by AI-driven analytics and smart order routing – improves execution quality and reduces slippage,”
Vinay Trivedi
According to Trivedi, effective liquidity risk management requires continuous real-time monitoring across currency pairs and tenors, ensuring sufficient buffers during periods of heightened volatility. “Leading institutions diversify liquidity sources through SGX FX’s smart APIs and analytical tools to avoid over-reliance on any single provider and to maintain consistent execution quality across varying market conditions,” he says.
“Compliance remains equally critical. Firms must maintain clear governance structures, defined accountability for liquidity and market risk oversight and reporting practices aligned with MiFID, Basel, BIS and local supervisory frameworks. Robust AML/KYC controls are essential, particularly where liquidity is sourced across multiple regions.”
Reducing latency
According to Biggs, the most immediate technology challenge faced by institutional firms who wish to upgrade their liquidity infrastructures is latency, the reduction of which requires continuous investment in network topology, smart order routing and co-location strategies.
“Beyond latency, integration complexity is a major obstacle,” he says. “Many institutions still operate legacy systems that are difficult to interface with modern APIs or FIX-based aggregation engines. Overcoming this requires modular architectures, containerisation and a shift toward event-driven data pipelines. Finally, firms must invest in observability monitoring latency, fill rates and quote behaviour across the stack because without visibility, optimisation is impossible.”
The technology challenges faced by institutional brokerages who wish to upgrade their liquidity infrastructures can be significant, especially if the process involves moving from one third party trading and order management system to another.
According to Husband, the first challenge is that the new liquidity infrastructure upgrade must cover all aspects of the current liquidity offering, whether it is on the front desk in terms of different products, tenors and connectivity conformances or back office requirements such as trade routing or reporting, which many clients now stipulate these days.
“The next challenge is the move itself – it could easily take the better part of six months to a year to transfer all liquidity providers and client connections to the new platform,” he says. “Lighter upgrades, such as improving latency, fill rates or general connectivity, can be implemented with less lift. Addressing these challenges requires preparation and specifically understanding the logical order of steps to take and executing them over a well-defined project timeline.”
Risk management
On the question of the risk and compliance management issues that need to be considered and addressed by firms looking to utilise more advanced liquidity services, Totten points out that where algorithmic trading is involved, there are a lot of controls that need to be in place and ongoing testing is required to ensure there is no risk of issues causing market disruption.
“This obviously becomes more complex the more liquidity providers are in use and there are additional risks around credit, as lines have to be put in place and coordinated across each venue,” he adds. “There is also additional market risk when operating more complex strategies across a range of platforms simultaneously, although there are also potentially significant benefits from the increased access to liquidity.”
When asked which strategic considerations are important to consider when implementing advanced liquidity services, Trivedi suggests that firms need to balance technological sophistication with market adaptability.
“Integrating liquidity across multiple venues and counterparties – enhanced by AI-driven analytics and smart order routing – improves execution quality and reduces slippage,” he continues. “To achieve this, institutions must invest in high performance, real-time data processing to support dynamic pricing and automated risk adjustments, while tailoring execution models to the needs of varied client segments.”
Operational resilience and cost efficiency are equally vital. Advanced liquidity services must leverage low latency connectivity across major financial data centres such as NY4, LD4, TY3 and SG1 to support scalable volumes without compromising execution speed or market impact.
“Partnering with platforms such as SGX FX that offer deep presence in emerging markets, including onshore liquidity access for NDFs and less liquid currency pairs, enables firms to access broader trading opportunities,” says Trivedi.
In FX markets, firms adopting advanced liquidity services must navigate complex risk and compliance considerations
Governance important
As liquidity management becomes increasingly automated and data-driven, governance becomes critical. Firms must ensure that their execution policies, routing logic and counterparty relationships all remain compliant with evolving regulatory standards such as MiFID II and EMIR.
Key considerations identified by Biggs include transparency around last-look practices, fair access principles and best execution reporting. “Data lineage and auditability must be built into the technology stack from day one, ensuring that every price, fill and routing decision can be reconstructed if challenged.”
The most strategic decision is whether to build in-house or outsource to a trusted liquidity partner. Building your own stack provides full control, deep customisation and internal ownership of data – but it also requires heavy investment in engineering talent, infrastructure and ongoing support.
Outsourcing to a prime-of-prime or specialist liquidity technology provider can dramatically reduce time-to-market and operational complexity, although firms must ensure transparency over routing logic, cost structures and data rights.
“In practice, many institutions adopt a hybrid model where they retain internal control of analytics, risk and routing logic while leveraging third party infrastructure for connectivity, hosting and regulatory coverage,” says Biggs. “The right strategy depends on the firm’s size, regulatory obligations and appetite for technological independence.”