CMC Markets’ consolidates liquidity services offerings

In recent years, we’ve seen an unparalleled degree of change when it comes to precisely how those entities working in the forex industry get to access underlying market liquidity. Evolution in the way that the diminishing pool of prime brokers want to do business has forced a wholesale rethinking of how brokers, hedge funds and smaller institutions now access the flow they need. This has never been a market to sit still however, so we’ve seen a new generation of liquidity provider emerge, helping bridge the gap between some of the biggest banks in the world and help ensure the smooth running of the wider trading ecosystem.

September, 2018

Richard Elston
Richard Elston

CMC Markets is one institution which has been very much at the forefront of this evolutionary movement. As one of the world’s largest retail derivatives providers, like others in this category it already had its own significant flow of business. What’s more the company is well regarded, both through its 30 year trading legacy, its multi-jurisdiction licensing and also through its premium equity listing on the London Stock Exchange. This combination not only means that the remaining cohort of prime brokers remain happy to work with entities of such scale, but the company is also in a position to open up its liquidity provider relationships to those third parties who need indirect access. These heavyweights of the retail industry have without doubt stepped up to address the fundamental change in how liquidity is aggregated and distributed, in turn helping others achieve better pricing and execution.

Next generation proposition

The story doesn’t however stop there. CMC Markets is now promoting its full range of liquidity services from a common perspective, regardless of the asset class involved or the nature of the liquidity feed required. To achieve this, the company has taken its Prime FX, Prime Derivatives and API solutions, to provide a next generation tier one liquidity proposition for the industry. 

As Richard Elston, head of Institutional at CMC Markets, explains, “As a business, we’re increasingly aware of the benefits of facilitating top-tier liquidity solutions for all market participants, be they banks, brokers, funds or other trading desks. Our comprehensive institutional suite provides liquidity services that sit across multiple assets and include our Prime Derivatives, Prime FX, and API Direct offerings. What’s more, we can sculpt our liquidity provision to each individual client, in turn ensuring they’re making the most of each relationship we deliver.”

The company positions its Prime FX offering as catering to a range of FX trading needs in a single flexible venue. It provides direct access to institutional market liquidity, competitive prices and more than 60 spot FX and bullion types. CMC Prime Derivatives brings an institutional trading solution with over 9000 global single stock CFDs, advance order management and low latency access to multiple pools of displayed and non-displayed liquidity. API Direct affords access to consistent pricing and market depth across over 400 different instruments, all in a package that can be quickly integrated through a standard FIX API.  

CMC Vision

Alongside liquidity services comes another innovation from CMC Markets, CMC Vision. Available o be delivered either via a stand-alone GUI or an API for those looking for integration into existing middle or back office systems, this provides counterparties such as hedge funds and white label clients with a snapshot of their exposure, presented in the most appropriate format - globally, by sub account, by currency or even by individual position. This significantly improves functionality when it comes to risk management, end of day reporting and performance measurement. 

The provision of liquidity in this market has undergone dramatic change in the last few years, but there are few who believe that we’ll see a reversion to the old ways of business now. What we have today will arguably be considered very much the new normal, as the biggest banks continue on a quest to eradicate unnecessary cost and ensure that risk profiles are kept to an absolute minimum. 

CMC Markets certainly aren’t the only large broker to be forging this path, but it’s difficult to avoid the point that the commitment of companies like this to improving liquidity has genuinely improved service for all. With a richer, more vibrant forex ecosystem, all customers stand to benefit from better pricing, better execution and by virtue of there being more providers, better service standards, too. 

Change within an industry like this can often be seen as disappointing, but this journey - which started almost four years ago when the Swiss National Bank’s actions briefly injected unprecedented levels of volatility into currency markets - can now be seen as having genuinely improved the service available to the masses. The forex market has never been one to shy away from innovation, so many will be looking forward to what evolution will be seen as we move into 2019 and on to the next decade.