Nicholas Pratt
Nicholas Pratt

Single-dealer platforms: staying ahead in the FX game

The electronic FX market started to develop back in 2000 with the launch of a number of multi-dealer trading platforms or portals that exploited the development of online and web technology to enable traders to see multiple prices on one screen and to execute on these prices electronically. At the same time as contributing to these multi-dealer portals, banks were also busy developing their own single dealer electronic platforms. Nicholas Pratt examines why the value proposition of these single-dealer platforms continues to strengthen for many trading firms and FX buy-side participants.

Ten years after the arrival of electronic FX, banks are continuing to invest in their single-dealer platforms which have been enjoying a resurgence of late.  According to Paul Caplin, chief executive of Caplin Systems, a provider of e-commerce technology for use in single-dealer platforms, there are numerous factors driving clients to single-dealer FX platforms. “Firstly there is the speed and reliability of execution which are more critical factors than price in a liquid market like FX. Then there is the ability to execute more complex trades and the ability to set up multi-leg trades. Integration of research and technical analysis is also more easily supported through a single-dealer platform – this includes both the contribution of a trade idea and also the analysis to support when exactly a pre-determined trade should be executed to maximise profit and minimise market impact. And single-dealer platforms are rapidly catching up with or even overtaking multi-dealer platforms in terms of...continued

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