Vivek Shankar spoke to several key industry players about the year ahead and gathered their thoughts on some of the things we should expect for the FX market in important areas such as algo trading and execution analytics, liquidity management, post-trade FX, technology, and payments.
PEER JOOST, CEO OF DIGITEC, ON THE EVOLUTION OF FX PLATFORMS AND THE SWAPS MARKET:
“Interdealer FX Swaps trading, currently dominated by the broker market, has begun to migrate to electronic venues”
Peer Joost
The FX Swaps market is migrating to electronic channels, and we expect the pace of change to continue through 2025. Clients want to trade FX Swaps in multiple currencies, and tenors beyond overnight and Tom-Next, and banks will only be able to service clients efficiently by implementing scalable technology solutions, where workflows are largely automated. As electronic trading has grown, the velocity of the underlying market has increased which means that banks using manual processes or Excel to manage their FX Swaps books are now turning to technology solutions to keep pace. Only by implementing automated workflows can banks of all sizes cut costs and have the capacity to manage more client business.
In 2024 we saw growth in the regional bank sector and expect more of these banks to migrate to automated pricing solutions in 2025, where implementing SaaS technology deployed in the Cloud reduces the investment required to provide accurate and fast FX Swaps pricing.
Interdealer FX Swaps trading, currently dominated by the broker market, has begun to migrate to electronic venues, like 360T SUN and LSEG Forwards Matching. At DIGITEC we developed D3 OMS to increase workflow automation and enable traders managing FX Swaps risk to connect directly to these interdealer FX Swaps venues and efficiently place and manage orders.
We saw our first clients go live in 2024 and have a healthy pipeline currently onboarding. Driven by an increased number of D3 OMS users, combined with the emergence of new interdealer venues, we expect more volume to migrate to electronic channels in 2025.
Data will continue to grow in importance as more pricing engines are implemented and more banks automate workflows. For banks and traders to fully build and maintain their curves they need access to high-quality data, and our Swaps Data Feed (SDF) allows them to improve pricing accuracy and extend currency coverage.
NDF volumes will also increase in 2025. There has been impressive growth in Asian NDF markets, with Korea, Taiwan, India, and Indonesia some of the most traded NDFs globally. Although NDF volumes are currently skewed towards voice, we are seeing a strong push by the bigger NDF participants in Asia to move more flow to electronic channels. Looking at NDF Swaps there are more data sources emerging, which combined with more electronic trading will continue to drive automation in the more liquid parts of these markets.
Banks using manual processes or Excel to manage their FX Swaps books are now turning to technology solutions to keep pace.
STEPHAN VON MASSENBACH, CRO OF DIGITEC, ON THE STATE OF COMBINED LISTED FX AND OTC TRADING:
“In terms of electronification, FX Swaps are still evolving, so in the near term algos will not gain the same levels of traction as Spot FX.”
Stephan von Massenbach
In the FX Swaps market trading firms are now building their curves using data from multiple sources, including OTC and listed FX trading sources like OIS/RFR. As they look to improve their pricing, they are building ever more sophisticated pricing models which increasingly go beyond existing OTC market data, to include yield curves and inferred FX swap points.
For a large Market Making bank, up to 20,000 data points need to be priced along a forward curve, which must quickly adjust when the market starts to move. Models that solely rely on FX swap prices published by brokers are particularly vulnerable, as these data points are not only among the last to update in times of movement, but they also do not cover relevant points such as central bank dates and liquidity events (such as month- and year-end) that show the largest effect.
Many of our clients resolve these issues by turning to D3 curves, a tool that models different views of the market, by tapping into a basket of market data including FX Swaps and Forwards, FX Spot, STIR Futures, OIS, IRS and Cross-Currency Basis Swaps. This allows them to combine high-frequency with lower-frequency data and isolate and control effects such as end-of-year turns and central bank decisions. Building safety mechanisms and checks on such a granular level is crucial to aggressive pricing and staying competitive in the market.
STEPHAN VON MASSENBACH, ON THE DEMAND FOR EXECUTION ANALYTICS AND ALGO EVOLUTION IN SWAPS:
As more FX Swaps trading is executed over electronic channels, we see significant changes to the market structure and an increase in automation, liquidity, and data availability. All these changes will enable algos to execute trades.
Algos need high-quality data. In the past, this was not available for FX Swaps as there was no recognised interbank data feed. Traders relied on FX swap prices published by brokers which provided only a limited view of the market. Solutions like the Swaps Data Feed (SDF), created by DIGITEC and 360T, and based on participating major FX banks’ raw pricing are addressing this gap.
Like the rest of the market, the use of execution algos is growing, but in the case of FX Swaps is still relatively small. In terms of electronification, FX Swaps are still evolving, so in the near term algos will not gain the same levels of traction as Spot FX. For this to change there needs to be liquidity across the forward curve (not just the short dates) and more sources of data to fuel pricing engines. This is coming, but not in 2025.
GAVIN WHITE, GROUP CEO OF 26 DEGREES GLOBAL MARKETS, AND LYDIA SOLINSKI, MANAGING DIRECTOR, LIQUIDITY AND DATA STATE STREET GLOBALLINK ON HOW LIQUIDITY MANAGERS’ ROLES WILL CHANGE:
“Automated analysis of input pricing and client flows has enhanced liquidity managers’ ability to identify and assess changes.”
Gavin White
White: The liquidity manager’s role will increasingly focus on the compartmentalisation of flows and matching them with appropriate liquidity pools which are aggregated via well-considered execution methods.
Key though, is the ability to understand the intention of the liquidity consumer when routing flow. A solid understanding of client intent can inform suggestions as to how changes in execution style or tweaks to the configuration of trading systems can lead to better execution outcomes for clients.
For example, proactive conversations with clients regarding the negative impacts of over-aggregation are important, however, there may be limitations within the liquidity consumer’s infrastructure that mean over-aggregation is an unfortunate reality.
In such instances, liquidity managers should be in a position to optimise liquidity pools and segregate hedge flows according to flow profile and market impact – ensuring the flow is being effectively priced, rather than subsets of more impactful flow resulting in higher execution costs for benign subsets.
In these cases, a greater reliance on real-time data-driven decision-making is required.
Automated analysis of input pricing and client flows has enhanced liquidity managers’ ability to identify and assess changes. But, the outcome of such analysis will still involve direct dialogue with clients. These conversations can increasingly be informed by metrics that are not just transparent, but timely.
New products and access to new markets will continue to present challenges and opportunities for liquidity managers. For us at 26 Degrees, our newly launched trading product Pairs CFDs-enabling clients to trade any instrument against another, just like an FX Pair has forced us to be agile and develop innovative approaches to managing this distinct flow effectively.
Solinski: Traditionally, the role of a liquidity manager has been to ensure there is sufficient liquidity for the participants of the ECN. The availability of data has empowered LM to be more prescriptive in the management of liquidity, often using data to back suggestions of optimization. This results in more curated liquidity for our participants. The key change to the function of a liquidity manager will be in the service that they provide. Liquidity management is often what sets one ECN apart from another, and it’s in the value they create.
Liquidity managers are increasingly becoming an extension of the sell side desks, working closely within the parameters of their expectations, thus actively managing profiles of liquidity consumers on their behalf. At GlobalLink, we have invested in better tools to process data at speed.
We are rolling out AI and ML functions that allow liquidity managers to use historical and real-time trade and price data to construct ‘prescriptive analytics’, where data underpins every suggestion for optimisation. Such service is available to all participants. At GlobalLink we are investing in data at the core of liquidity management, translating insights into better trade outcomes.
WHITE AND SOLINSKI ON HOW THE MAKEUP OF LIQUIDITY POOLS WILL NEED TO CHANGE:
“With a better understanding of the parametrisations of a makers price stream and faster delivery of key data, the make up of liquidity pools have become more dynamic.”
Lydia Solinski
White: As liquidity sources become more volatile and client flows are increasingly differentiated, I think we will see increased segregation of liquidity pools based off flow quality and client preferences or intent. The goal is to ensure that different flow profiles are matched with pools that offer optimal liquidity, whether that be for benign flow, flow exhibiting market impact, or other segregations such as skew safe pools.
Building on this, it is important that liquidity consumers/aggregators, like 26 Degrees, ensure that the risk models of LPs are as aligned as possible within any particular pool of curated liquidity. It only takes one LP to exit risk more aggressively than their peers in a particular liquidity pool for market impact to be amplified, leading to wider spreads and higher total execution costs in the long term.
It’s also possible that we see segregation among a broader cohort of clients of lit and dark pricing availability. With more and more providers of liquidity looking to gain a competitive advantage by showing more aggressive skews, defending against any undue leaking of these skews will become an increasingly important component of the compartmentalisation that liquidity managers oversee.
More granular methods for testing skew leakage are regularly being deployed that make the job of pinpointing skew leakage more effective.
Solinski: Liquidity requirements have never been broader, causing price providers to expand the number of sessions across which they price into customers today. Primarily, platforms need to effectively and efficiently communicate data to price makers, allowing them to curate appropriate pricing per participant. This has been a key driver to the work we have done around our analytics at GlobalLink. Improved tools allows GlobalLink to harness data to better categorise and tier flow, providing assurance to those pricing customers on our platform. With a better understanding of the parametrisations of a makers price stream and faster delivery of key data, the make up of liquidity pools have become more dynamic, as the feedback loop is streamlined.
Makers are acting upon data faster, resulting in more frequent changes to price configurations. This results in more curated pools of liquidity, benefiting the end consumer. Harnessing data, multiple liquidity environments can exist simultaneously, allowing for both making and taking parties to trade confidently. At GlobalLink we see participants actively seeking to protect good liquidity. Skew safe pools, hidden order streams, full amount environments and Global FX Code compliant pools are some of the many ways in which pricing can be protected from misuse.
Liquidity management is often what sets one ECN apart from another, and it’s in the value they create.
WHITE AND SOLINSKI ON THE KINDS OF LIQUIDITY PROVISION ANALYTICS THEY SEE COMING INTO THE MARKET:
White: Benchmarking and quote filtration are a great example of this and one area where aggregation is blended with the curation of client pricing. Whether benchmarking takes the form of an independent, non-executable price source or simply a specific subset of liquidity providers that are selected from within the liquidity pool, understanding the client preference is key. Some clients simply want to see a clean and transparent view of the market mid-rate with minimal spread volatility, others are keen to deal with heavily skewed pricing and are less focused on spreads or mid-rates.
Customisation of liquidity pools, benchmarks, quote filters, and spreads is something we focus on heavily to ensure clients achieve pricing and executions that best reflect their specific needs.
Real-time market impact data is also critically important, and 26 Degrees has created a proprietary data analytics system (“Insights”) in-house to deliver just that. The data can be readily grouped and filtered across multiple facets of client activity (time, pair, size, client-tag, order type, market condition, correlations etc) – which allows our team to communicate openly with clients to easily identify subsets of higher impact order flows, changes to market impact profiles, and trends across liquidity pools/providers.
Solinski: In order to move towards data driven insights and strive for better trade outcomes, we are working on tools that deliver value from data. Building on trade analytics, we are harnessing ML/AI functions to overlay pricing and trade data in a bid to deliver prescriptive analytics. We are seeing FX participants seeking not only where they can do better, but how? This is why we are investing in our tools to help optimise pricing configurations, supporting the capturing of profitable flow and effectively managing more difficult trading behavior. This shift towards a more prescriptive service of data is creating a more proactive Liquidity management function. Alerting tools and parametrization will be central to effective liquidity management, slowing the degradation of liquidity.
SOLINSKI ON THE ROLE LIQUIDITY MANAGEMENT PROCESSES WILL PLAY:
Liquidity management processes have and will continue to be central to the very offering and success of ECNs. . The key difference will be in the quality and speed at which data is translated for better trade outcomes and optimal management of liquidity.
EUGENE MARKMAN, HEAD OF FX AT ION, ON CLOUD TRENDS, BIG DATA USE CASES, AI, AND ML EVOLUTION:
“In 2025, the use of AI in FX will likely gather pace. However, regulations and the technical complexities of AI implementation remain significant hurdles.”
Eugene Markman
Cloud computing is likely to become increasingly widespread in the FX market in 2025. This growth will be driven by the need for flexible computing systems that can scale up and down alongside a firm’s daily operations.
A specific trend in response to these needs that we are likely to see is the pairing of cloud-based systems with new AI tools, enabling real-time analytics, predictive modelling, and tailored customer experiences.
Another significant trend we’ll see emerge as a result, is the need for enhanced security. Especially as new security certifications like ISO 27001 loom, firms will need to be one step ahead to comply with the evolving global regulations.
When it comes to firms collecting, processing, and analysing large quantities of data, making certain the data is clean and normalised is of increasing importance. Ensuring that data from different systems is comparable and consistent will be crucial for modern firms to stay competitive in today’s digital market.
In 2025, the use of AI in FX will likely gather pace. However, regulations and the technical complexities of AI implementation remain significant hurdles.
Before a firm can fully reap the benefits of AI tools, it’s crucial to first make sure they have an adequate data strategy, an area in which many smaller firms continue to lag. As a result, while 2025 is likely to witness the expansion of AI in the FX market, this transformation is expected to be gradual rather than rapid and straightforward.
LOUISA KWOK, MANAGING DIRECTOR, HEAD OF TRADENEXUS, STATE STREET GLOBALLINK, ON POST TRADE AUTOMATION, THE ROLE OF ANALYTICS, AND BEST PRACTICES:
“Now with T+1 in place in the United States and EU and UK to follow in 2027, we expect clients to go back and find efficiencies in the operational space to better manage shorter timeframes,”
Louisa Kwok
In 2025, we expect that more of our clients will increase robotic process adoption (RPA) and to some degree adoption of AI for their operational processing, counterparty engagement, and onboarding.
Now with T+1 in place in the United States and EU and UK to follow in 2027, we expect clients to go back and find efficiencies in the operational space to better manage shorter timeframes, such as with the automation of reconciling and agreeing settlement nets, and in the resolution of any trade discrepancies.
With less appetite for operational discrepancies, we see analytics playing a greater part in post-trade processes in identifying high touch flows as well as continued closer linking between the front office and operations. In light of this, TradeNeXus has recently launched post-trade metrics to assist our clients in assessing performance regularly in addition to functionalities to further automate their workflows.
Firms will likely continue to review their operational processes to further mitigate risk and identify problems earlier. A part of this process review should include the ability to capture, measure, and review exception cases to consider if these can be further reduced or risk mitigated.
Firms should consider leveraging dashboard monitoring platforms, such as GlobalLink DigitalSM, which provide key views across multiple applications through front, middle and back offices with FDC3 interoperability and single sign-on for ease of investigation.
BLAKE TREVES, MANAGING DIRECTOR, HEAD OF GLOBALLINK PAYMENTS ON PAYMENT TRENDS IN 2025 AND CROSS-BORDER INFRASTRUCTURE:
“Data-driven payments initiatives in 2025 will be driven by continued product enhancements and mandatory upgrades to SWIFT settlement messages, and enhanced screening.”
Blake Treves
Automation in the payments space has been a trend throughout recent years and in 2025 we’ll see even more intelligent automated workflows and tools adding efficiency and transparency. APIs and modern platforms allow treasury and cash management teams to streamline multiple functions and reduce risks with minimal investment.
Data-driven payments initiatives in 2025 will be driven by continued product enhancements and mandatory upgrades to SWIFT settlement messages, and enhanced screening. Transparency into transactional data, accounts, beneficiaries, and settlement instructions is a priority, leading to increased flexibility to move toward automation, leverage transaction cost/data analytics, and prepare for AI-driven insights.
Payments security will be a multi-layered approach including information security, regulatory compliance, and fraud detection. Data security will become more granular, and encryption applied across the payment lifecycle.
The implementation of the EU Digital Operational Resilience Act (DORA) will compel clients to adopt stringent security and risk management across the technology estate, especially critical payment systems. There is room to improve interoperability and standardization within the payment infrastructure. Interoperability brings payment data to life, making it actionable and accessible.
Enabling secure sharing of data between systems allows users to be more agile, integrating payments within the business, gaining market insights, and optimizing FX broker relationships.
Automation enhancements throughout the payments workflow lifecycle and embedded payments are promising new trends. Technology has made it easier for small teams to innovate by building integrated cross-border payments into their existing workflows and processes, helping firms manage risk closer to real time, in sync with other commercial activities.
DORA will compel clients to adopt stringent security and risk management.
PEER JOOST, CEO OF DIGITEC ON EMERGING REGIONAL HUBS:
In FX Swaps, the Asia market is maturing rapidly, with banks adopting automated workflows and capturing more and more market data, which is modelled to improve pricing accuracy. This accuracy is essential as we expect to see increased competition in Asia in 2025, not just in G10 currencies, but also in other currencies where central bank effects play a significant role.
FX Swaps volumes are dominated by trading in London, Singapore, and Hong Kong. Singapore will continue to position itself as Asia’s FX hub, which is one of the reasons why DIGITEC recently opened an office here.
MICHAEL O’MALLEY, MANAGING DIRECTOR, HEAD OF GLOBALLINK DIGITAL & GLOBALLINK SYNERGY, STATE STREET ON THE NEED FOR INTEROPERABILITY ON TRADING DESKS:
“As trading environments grow more complex, the need for seamless interoperability across platforms, systems, and data sources has never been greater.”
Michael O’Malley
As trading environments grow more complex, the need for seamless interoperability across platforms, systems, and data sources has never been greater.
Technology advancements in the custom workflow and interoperability space have progressed immensely over the past five years to allow for deeply customized workflows but still require specialized development teams leveraging the latest in Web and Desktop container technology to achieve efficient results.
The GlobalLink Digital platform, part of the award-winning GlobalLink suite of trading products, offers a new way to navigate the array of challenges that traders confront.
The goal for traders is to have the ability to create and operate multi-asset electronic trading solutions across the entire workflow without compromising on their desired outcomes.
What lies in store for e-FX in 2025
Vivek Shankar spoke to several key industry players about the year ahead and gathered their thoughts on some of the things we should expect for the FX market in important areas such as algo trading and execution analytics, liquidity management, post-trade FX, technology, and payments.
PEER JOOST, CEO OF DIGITEC, ON THE EVOLUTION OF FX PLATFORMS AND THE SWAPS MARKET:
“Interdealer FX Swaps trading, currently dominated by the broker market, has begun to migrate to electronic venues”
Peer Joost
The FX Swaps market is migrating to electronic channels, and we expect the pace of change to continue through 2025. Clients want to trade FX Swaps in multiple currencies, and tenors beyond overnight and Tom-Next, and banks will only be able to service clients efficiently by implementing scalable technology solutions, where workflows are largely automated. As electronic trading has grown, the velocity of the underlying market has increased which means that banks using manual processes or Excel to manage their FX Swaps books are now turning to technology solutions to keep pace. Only by implementing automated workflows can banks of all sizes cut costs and have the capacity to manage more client business.
In 2024 we saw growth in the regional bank sector and expect more of these banks to migrate to automated pricing solutions in 2025, where implementing SaaS technology deployed in the Cloud reduces the investment required to provide accurate and fast FX Swaps pricing.
Interdealer FX Swaps trading, currently dominated by the broker market, has begun to migrate to electronic venues, like 360T SUN and LSEG Forwards Matching. At DIGITEC we developed D3 OMS to increase workflow automation and enable traders managing FX Swaps risk to connect directly to these interdealer FX Swaps venues and efficiently place and manage orders.
We saw our first clients go live in 2024 and have a healthy pipeline currently onboarding. Driven by an increased number of D3 OMS users, combined with the emergence of new interdealer venues, we expect more volume to migrate to electronic channels in 2025.
Data will continue to grow in importance as more pricing engines are implemented and more banks automate workflows. For banks and traders to fully build and maintain their curves they need access to high-quality data, and our Swaps Data Feed (SDF) allows them to improve pricing accuracy and extend currency coverage.
NDF volumes will also increase in 2025. There has been impressive growth in Asian NDF markets, with Korea, Taiwan, India, and Indonesia some of the most traded NDFs globally. Although NDF volumes are currently skewed towards voice, we are seeing a strong push by the bigger NDF participants in Asia to move more flow to electronic channels. Looking at NDF Swaps there are more data sources emerging, which combined with more electronic trading will continue to drive automation in the more liquid parts of these markets.
STEPHAN VON MASSENBACH, CRO OF DIGITEC, ON THE STATE OF COMBINED LISTED FX AND OTC TRADING:
“In terms of electronification, FX Swaps are still evolving, so in the near term algos will not gain the same levels of traction as Spot FX.”
Stephan von Massenbach
In the FX Swaps market trading firms are now building their curves using data from multiple sources, including OTC and listed FX trading sources like OIS/RFR. As they look to improve their pricing, they are building ever more sophisticated pricing models which increasingly go beyond existing OTC market data, to include yield curves and inferred FX swap points.
For a large Market Making bank, up to 20,000 data points need to be priced along a forward curve, which must quickly adjust when the market starts to move. Models that solely rely on FX swap prices published by brokers are particularly vulnerable, as these data points are not only among the last to update in times of movement, but they also do not cover relevant points such as central bank dates and liquidity events (such as month- and year-end) that show the largest effect.
Many of our clients resolve these issues by turning to D3 curves, a tool that models different views of the market, by tapping into a basket of market data including FX Swaps and Forwards, FX Spot, STIR Futures, OIS, IRS and Cross-Currency Basis Swaps. This allows them to combine high-frequency with lower-frequency data and isolate and control effects such as end-of-year turns and central bank decisions. Building safety mechanisms and checks on such a granular level is crucial to aggressive pricing and staying competitive in the market.
STEPHAN VON MASSENBACH, ON THE DEMAND FOR EXECUTION ANALYTICS AND ALGO EVOLUTION IN SWAPS:
As more FX Swaps trading is executed over electronic channels, we see significant changes to the market structure and an increase in automation, liquidity, and data availability. All these changes will enable algos to execute trades.
Algos need high-quality data. In the past, this was not available for FX Swaps as there was no recognised interbank data feed. Traders relied on FX swap prices published by brokers which provided only a limited view of the market. Solutions like the Swaps Data Feed (SDF), created by DIGITEC and 360T, and based on participating major FX banks’ raw pricing are addressing this gap.
Like the rest of the market, the use of execution algos is growing, but in the case of FX Swaps is still relatively small. In terms of electronification, FX Swaps are still evolving, so in the near term algos will not gain the same levels of traction as Spot FX. For this to change there needs to be liquidity across the forward curve (not just the short dates) and more sources of data to fuel pricing engines. This is coming, but not in 2025.
GAVIN WHITE, GROUP CEO OF 26 DEGREES GLOBAL MARKETS, AND LYDIA SOLINSKI, MANAGING DIRECTOR, LIQUIDITY AND DATA STATE STREET GLOBALLINK ON HOW LIQUIDITY MANAGERS’ ROLES WILL CHANGE:
“Automated analysis of input pricing and client flows has enhanced liquidity managers’ ability to identify and assess changes.”
Gavin White
White: The liquidity manager’s role will increasingly focus on the compartmentalisation of flows and matching them with appropriate liquidity pools which are aggregated via well-considered execution methods.
Key though, is the ability to understand the intention of the liquidity consumer when routing flow. A solid understanding of client intent can inform suggestions as to how changes in execution style or tweaks to the configuration of trading systems can lead to better execution outcomes for clients.
For example, proactive conversations with clients regarding the negative impacts of over-aggregation are important, however, there may be limitations within the liquidity consumer’s infrastructure that mean over-aggregation is an unfortunate reality.
In such instances, liquidity managers should be in a position to optimise liquidity pools and segregate hedge flows according to flow profile and market impact – ensuring the flow is being effectively priced, rather than subsets of more impactful flow resulting in higher execution costs for benign subsets.
In these cases, a greater reliance on real-time data-driven decision-making is required.
Automated analysis of input pricing and client flows has enhanced liquidity managers’ ability to identify and assess changes. But, the outcome of such analysis will still involve direct dialogue with clients. These conversations can increasingly be informed by metrics that are not just transparent, but timely.
New products and access to new markets will continue to present challenges and opportunities for liquidity managers. For us at 26 Degrees, our newly launched trading product Pairs CFDs-enabling clients to trade any instrument against another, just like an FX Pair has forced us to be agile and develop innovative approaches to managing this distinct flow effectively.
Solinski: Traditionally, the role of a liquidity manager has been to ensure there is sufficient liquidity for the participants of the ECN. The availability of data has empowered LM to be more prescriptive in the management of liquidity, often using data to back suggestions of optimization. This results in more curated liquidity for our participants. The key change to the function of a liquidity manager will be in the service that they provide. Liquidity management is often what sets one ECN apart from another, and it’s in the value they create.
Liquidity managers are increasingly becoming an extension of the sell side desks, working closely within the parameters of their expectations, thus actively managing profiles of liquidity consumers on their behalf. At GlobalLink, we have invested in better tools to process data at speed.
We are rolling out AI and ML functions that allow liquidity managers to use historical and real-time trade and price data to construct ‘prescriptive analytics’, where data underpins every suggestion for optimisation. Such service is available to all participants. At GlobalLink we are investing in data at the core of liquidity management, translating insights into better trade outcomes.
WHITE AND SOLINSKI ON HOW THE MAKEUP OF LIQUIDITY POOLS WILL NEED TO CHANGE:
“With a better understanding of the parametrisations of a makers price stream and faster delivery of key data, the make up of liquidity pools have become more dynamic.”
Lydia Solinski
White: As liquidity sources become more volatile and client flows are increasingly differentiated, I think we will see increased segregation of liquidity pools based off flow quality and client preferences or intent. The goal is to ensure that different flow profiles are matched with pools that offer optimal liquidity, whether that be for benign flow, flow exhibiting market impact, or other segregations such as skew safe pools.
Building on this, it is important that liquidity consumers/aggregators, like 26 Degrees, ensure that the risk models of LPs are as aligned as possible within any particular pool of curated liquidity. It only takes one LP to exit risk more aggressively than their peers in a particular liquidity pool for market impact to be amplified, leading to wider spreads and higher total execution costs in the long term.
It’s also possible that we see segregation among a broader cohort of clients of lit and dark pricing availability. With more and more providers of liquidity looking to gain a competitive advantage by showing more aggressive skews, defending against any undue leaking of these skews will become an increasingly important component of the compartmentalisation that liquidity managers oversee.
More granular methods for testing skew leakage are regularly being deployed that make the job of pinpointing skew leakage more effective.
Solinski: Liquidity requirements have never been broader, causing price providers to expand the number of sessions across which they price into customers today. Primarily, platforms need to effectively and efficiently communicate data to price makers, allowing them to curate appropriate pricing per participant. This has been a key driver to the work we have done around our analytics at GlobalLink. Improved tools allows GlobalLink to harness data to better categorise and tier flow, providing assurance to those pricing customers on our platform. With a better understanding of the parametrisations of a makers price stream and faster delivery of key data, the make up of liquidity pools have become more dynamic, as the feedback loop is streamlined.
Makers are acting upon data faster, resulting in more frequent changes to price configurations. This results in more curated pools of liquidity, benefiting the end consumer. Harnessing data, multiple liquidity environments can exist simultaneously, allowing for both making and taking parties to trade confidently. At GlobalLink we see participants actively seeking to protect good liquidity. Skew safe pools, hidden order streams, full amount environments and Global FX Code compliant pools are some of the many ways in which pricing can be protected from misuse.
WHITE AND SOLINSKI ON THE KINDS OF LIQUIDITY PROVISION ANALYTICS THEY SEE COMING INTO THE MARKET:
White: Benchmarking and quote filtration are a great example of this and one area where aggregation is blended with the curation of client pricing. Whether benchmarking takes the form of an independent, non-executable price source or simply a specific subset of liquidity providers that are selected from within the liquidity pool, understanding the client preference is key. Some clients simply want to see a clean and transparent view of the market mid-rate with minimal spread volatility, others are keen to deal with heavily skewed pricing and are less focused on spreads or mid-rates.
Customisation of liquidity pools, benchmarks, quote filters, and spreads is something we focus on heavily to ensure clients achieve pricing and executions that best reflect their specific needs.
Real-time market impact data is also critically important, and 26 Degrees has created a proprietary data analytics system (“Insights”) in-house to deliver just that. The data can be readily grouped and filtered across multiple facets of client activity (time, pair, size, client-tag, order type, market condition, correlations etc) – which allows our team to communicate openly with clients to easily identify subsets of higher impact order flows, changes to market impact profiles, and trends across liquidity pools/providers.
Solinski: In order to move towards data driven insights and strive for better trade outcomes, we are working on tools that deliver value from data. Building on trade analytics, we are harnessing ML/AI functions to overlay pricing and trade data in a bid to deliver prescriptive analytics. We are seeing FX participants seeking not only where they can do better, but how? This is why we are investing in our tools to help optimise pricing configurations, supporting the capturing of profitable flow and effectively managing more difficult trading behavior. This shift towards a more prescriptive service of data is creating a more proactive Liquidity management function. Alerting tools and parametrization will be central to effective liquidity management, slowing the degradation of liquidity.
SOLINSKI ON THE ROLE LIQUIDITY MANAGEMENT PROCESSES WILL PLAY:
Liquidity management processes have and will continue to be central to the very offering and success of ECNs. . The key difference will be in the quality and speed at which data is translated for better trade outcomes and optimal management of liquidity.
EUGENE MARKMAN, HEAD OF FX AT ION, ON CLOUD TRENDS, BIG DATA USE CASES, AI, AND ML EVOLUTION:
“In 2025, the use of AI in FX will likely gather pace. However, regulations and the technical complexities of AI implementation remain significant hurdles.”
Eugene Markman
Cloud computing is likely to become increasingly widespread in the FX market in 2025. This growth will be driven by the need for flexible computing systems that can scale up and down alongside a firm’s daily operations.
A specific trend in response to these needs that we are likely to see is the pairing of cloud-based systems with new AI tools, enabling real-time analytics, predictive modelling, and tailored customer experiences.
Another significant trend we’ll see emerge as a result, is the need for enhanced security. Especially as new security certifications like ISO 27001 loom, firms will need to be one step ahead to comply with the evolving global regulations.
When it comes to firms collecting, processing, and analysing large quantities of data, making certain the data is clean and normalised is of increasing importance. Ensuring that data from different systems is comparable and consistent will be crucial for modern firms to stay competitive in today’s digital market.
In 2025, the use of AI in FX will likely gather pace. However, regulations and the technical complexities of AI implementation remain significant hurdles.
Before a firm can fully reap the benefits of AI tools, it’s crucial to first make sure they have an adequate data strategy, an area in which many smaller firms continue to lag. As a result, while 2025 is likely to witness the expansion of AI in the FX market, this transformation is expected to be gradual rather than rapid and straightforward.
LOUISA KWOK, MANAGING DIRECTOR, HEAD OF TRADENEXUS, STATE STREET GLOBALLINK, ON POST TRADE AUTOMATION, THE ROLE OF ANALYTICS, AND BEST PRACTICES:
“Now with T+1 in place in the United States and EU and UK to follow in 2027, we expect clients to go back and find efficiencies in the operational space to better manage shorter timeframes,”
Louisa Kwok
In 2025, we expect that more of our clients will increase robotic process adoption (RPA) and to some degree adoption of AI for their operational processing, counterparty engagement, and onboarding.
Now with T+1 in place in the United States and EU and UK to follow in 2027, we expect clients to go back and find efficiencies in the operational space to better manage shorter timeframes, such as with the automation of reconciling and agreeing settlement nets, and in the resolution of any trade discrepancies.
With less appetite for operational discrepancies, we see analytics playing a greater part in post-trade processes in identifying high touch flows as well as continued closer linking between the front office and operations. In light of this, TradeNeXus has recently launched post-trade metrics to assist our clients in assessing performance regularly in addition to functionalities to further automate their workflows.
Firms will likely continue to review their operational processes to further mitigate risk and identify problems earlier. A part of this process review should include the ability to capture, measure, and review exception cases to consider if these can be further reduced or risk mitigated.
Firms should consider leveraging dashboard monitoring platforms, such as GlobalLink DigitalSM, which provide key views across multiple applications through front, middle and back offices with FDC3 interoperability and single sign-on for ease of investigation.
BLAKE TREVES, MANAGING DIRECTOR, HEAD OF GLOBALLINK PAYMENTS ON PAYMENT TRENDS IN 2025 AND CROSS-BORDER INFRASTRUCTURE:
“Data-driven payments initiatives in 2025 will be driven by continued product enhancements and mandatory upgrades to SWIFT settlement messages, and enhanced screening.”
Blake Treves
Automation in the payments space has been a trend throughout recent years and in 2025 we’ll see even more intelligent automated workflows and tools adding efficiency and transparency. APIs and modern platforms allow treasury and cash management teams to streamline multiple functions and reduce risks with minimal investment.
Data-driven payments initiatives in 2025 will be driven by continued product enhancements and mandatory upgrades to SWIFT settlement messages, and enhanced screening. Transparency into transactional data, accounts, beneficiaries, and settlement instructions is a priority, leading to increased flexibility to move toward automation, leverage transaction cost/data analytics, and prepare for AI-driven insights.
Payments security will be a multi-layered approach including information security, regulatory compliance, and fraud detection. Data security will become more granular, and encryption applied across the payment lifecycle.
The implementation of the EU Digital Operational Resilience Act (DORA) will compel clients to adopt stringent security and risk management across the technology estate, especially critical payment systems. There is room to improve interoperability and standardization within the payment infrastructure. Interoperability brings payment data to life, making it actionable and accessible.
Enabling secure sharing of data between systems allows users to be more agile, integrating payments within the business, gaining market insights, and optimizing FX broker relationships.
Automation enhancements throughout the payments workflow lifecycle and embedded payments are promising new trends. Technology has made it easier for small teams to innovate by building integrated cross-border payments into their existing workflows and processes, helping firms manage risk closer to real time, in sync with other commercial activities.
PEER JOOST, CEO OF DIGITEC ON EMERGING REGIONAL HUBS:
In FX Swaps, the Asia market is maturing rapidly, with banks adopting automated workflows and capturing more and more market data, which is modelled to improve pricing accuracy. This accuracy is essential as we expect to see increased competition in Asia in 2025, not just in G10 currencies, but also in other currencies where central bank effects play a significant role.
FX Swaps volumes are dominated by trading in London, Singapore, and Hong Kong. Singapore will continue to position itself as Asia’s FX hub, which is one of the reasons why DIGITEC recently opened an office here.
MICHAEL O’MALLEY, MANAGING DIRECTOR, HEAD OF GLOBALLINK DIGITAL & GLOBALLINK SYNERGY, STATE STREET ON THE NEED FOR INTEROPERABILITY ON TRADING DESKS:
“As trading environments grow more complex, the need for seamless interoperability across platforms, systems, and data sources has never been greater.”
Michael O’Malley
As trading environments grow more complex, the need for seamless interoperability across platforms, systems, and data sources has never been greater.
Technology advancements in the custom workflow and interoperability space have progressed immensely over the past five years to allow for deeply customized workflows but still require specialized development teams leveraging the latest in Web and Desktop container technology to achieve efficient results.
The GlobalLink Digital platform, part of the award-winning GlobalLink suite of trading products, offers a new way to navigate the array of challenges that traders confront.
The goal for traders is to have the ability to create and operate multi-asset electronic trading solutions across the entire workflow without compromising on their desired outcomes.