Complex but rewarding – extracting the maximum value from FX Liquidity Aggregation

Nicholas Pratt examines how FX participants are able to extract the maximum value from the ever evolving world of the FX liquidity aggregation and how the providers are working to match the demands of buy and sell side.

The quality of liquidity, as opposed to just liquidity for liquidity’s sake, is becoming increasingly important for FX trading firms. To this end FX aggregation is of vital assistance to both sell-side and buy-side firms. For the former it helps them to effectively compete for client order flow and handle increased trade volumes. And for the latter, it can intelligently source the most suitable liquidity for a varying range of participants.  However, to reach this point, whereby traders and banks can extract the maximum value from these tools and tap into high quality liquidity, FX aggregation has had to evolve. The questions is whether the various aggregation offerings, and there are many, have evolved enough. Technology has become more accessible and this has helped to increase the functionality and performance of aggregation platforms. But not every issue in the FX world is solely technology-based. The level of transparency employed by different providers can vary as can the bias towards sell...continued

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