EDGE FX RFQ: the new solution from Edgewater Markets

January 2024 in Partner Content

We asked Matt Kassel, Chief Operating Officer at the firm to tell us more about its exciting new trade execution service.

What prompted Edgewater Markets to design and launch this new Request for Quote (RFQ) trade execution service? 

Edgewater Markets designed and launched the new Request for Quote (RFQ) trade execution service in response to strong client demand and as a natural extension of their leading NDF and Spot streaming services. Clients value the anonymity, credit intermediation, and access to deep local liquidity that this offering provides through a single connection, while effectively reducing market impact. With evolving market dynamics and changing client preferences, there is a growing need for more versatile and innovative ways to trade, especially for less liquid instruments like NDF and NDS. While our streaming service is efficient for standardized trade sizes, clients increasingly expressed the need for executing larger trade sizes with local providers who specialize and can easily accommodate large transaction sizes in their local currency.  The introduction of RFQ trade execution was Edgewater Markets’ response to this demand, providing clients the flexibility required to efficiently manage order flow of any size or value date.

Why is EDGE FX RFQ so transformational for the FX trading market? 

EDGE FX RFQ service represents a transformational shift in how the Global FX market transacts for several compelling reasons. Firstly, it challenges and disrupts traditional trading methods that heavily rely on voice and chat interactions. By automating the workflow, EDGE FX RFQ allows local liquidity providers to scale their business and extend their reach, enhancing overall global market efficiency.

In addition, the service is the first of its kind to provide anonymous RFQ trading coupled with credit intermediation. This unique feature not only ensures that market participants can execute trades with enhanced privacy, but it also simplifies access to deep local providers who specialize in their currency. This innovation is a game-changer, allowing traders to effectively manage their positions, while providing access to a wide array of local liquidity sources through a single platform.

What customization of orders is possible with EDGE FX RFQ? 

EDGE FX RFQ offers a remarkable degree of order customization, granting users full control over the execution of their trading strategies. Users can opt for one-sided or two-way orders, tailoring their orders to specific market conditions and individual preferences. Additionally, the platform accommodates the trading of broken dates and swaps across FX metals and NDFs. This level of customization empowers traders to engage the market directly for large size orders resulting in a single trade and counterpart, enhancing their ability to navigate the FX market effectively and efficiently.

What other key features does EDGE FX RFQ incorporate? 

EDGE FX RFQ incorporates a unique set of features to optimize the foreign exchange trading experience. Notably, the platform facilitates the aggregation of the best bids and offers from multiple local providers via a single credit line, fostering competitive rates and streamlined trading. The inclusion of credit intermediation is pivotal, removing the need to establish direct credit relationships with multiple local market participants in each country, thus broadening market participation. Additionally, the platform embraces Straight-Through Processing (STP), automation and audit functions, ensuring seamless and error-free best execution, while aligning with emerging market shift toward electronic transaction processes. This integrated approach enhances overall efficiency, price discovery, and risk management in the FX market.

What direct benefits will it deliver to your clients? 

EDGE FX RFQ delivers direct benefits to global clients and local liquidity providers, driven by the platform’s capacity to aggregate pricing from multiple local sources anonymously. This heightened liquidity access attracts global market participants, resulting in a more robust market, by providing a wider array of trading opportunities. Additionally, clients experience a tangible improvement in trade execution through narrowed spreads and reduced slippage, especially in the handling of larger orders, by directing each trade to specific providers who specialize in the pair size and tenor. The platform’s automation ultimately leads to cost savings and enhanced profitability for both clients and LPs.

Edgewater Markets has a long history of driving innovation in FX trading. How excited are you about the positive impact EDGE FX RFQ will have and the new trading strategy possibilities it will open up?

Edgewater Markets has a rich history of pioneering innovation in FX trading, and we are incredibly excited about the positive impact that EDGE FX RFQ is delivering. This groundbreaking functionality is the first of its kind, setting a new standard in the industry, revolutionizing the way FX trades are executed.

One of the most exciting aspects of EDGE FX RFQ is that clients are embracing and advancing their trading strategies by using algorithms within the platform. This demonstrates the immediate value and adaptability of this cutting-edge solution, as clients find innovative ways to optimize their trading operations to achieve superior results.

Looking ahead, we are enthusiastic about the prospects of extending EDGE FX RFQ to a broader client base and encouraging more buyside participation. This expansion promises to open new avenues for traders, allowing them to explore diverse trading strategies and choice in execution methodology that capitalize on the unique features and benefits offered by the platform. We believe that this groundbreaking development and access to deep local liquidity in an anonymous fashion will reshape the FX trading landscape and empower clients to take their trading to new heights.