Introduction
Over the last several years, even casual industry observers have taken notice of the evolution and change in the FX industry, brought on by overall volume growth, technology and shifting market dynamics. And if the first several months of 2006 are any indication, then we can safely say that the pace of change is rapidly increasing.

Notable events that have recently shocked the industry include the sale or pending sales of some of the largest multi-bank portals: Hotspot, FXall, and EBS. Industry change will no doubt increase as the global liquidity providers evolve their approaches to the market.

To successfully manage and grow FX businesses in this new environment, industry experts recommend even more emphasis on technology and risk management. Flexibility to adapt is critical, and underlying systems must be efficient and nimble, allowing rapid connectivity with trading counterparties as industry players and markets change.

However, even with advancements in technology, integration of the many internal and external systems between these counterparties remains a huge challenge.

Integration the $64 billion question
Think of the many steps of data exchanges in negotiating, executing and processing an FX transaction. By many accounts, this is a very complex and messy integration problem, compounded by rates that are updated literally thousands of times per second.

To manage these processes, intensive integration with APIs and system feeds from multiple sources are required. The problem?

Some feeds are up, some are down, and do you know which ones have problems and how often? Prices arrive in diverse methods and formats, such as multi-tier, request for quote, request for stream, and executable streaming. Some venues are order driven, while others are quote driven. Stale, latent or bad prices can throw off order books for entire currency pairs. The list of integration challenges is long and constantly changing.

Even if a financial institution has invested heavily and solved these integration issues, costly resources must be dedicated on an ongoing basis to manage the various systems and changes that arise as trading relationships, APIs, and technology platforms evolve over time. Also, if there is a need to change or connect to new liquidity providers, portals or customers, investments in further integration such as writing to and managing new APIs is required. For most institutions, this type of IT resource and expertise is not in their core competency and is no longer feasible.

Enter The Grid
One answer to this integration-intensive problem for the FX industry is to leverage an emerging technology: market specific data grids, to deliver business value quickly and reliably by pooling resources into a single set of shared services amongst trading relationships. Ultimately, turning an integration-intensive need into an on-demand service.

While other industries have spent billions of dollars building this type of core infrastructure (telecom, travel, electricity, etc.), the opportunity to do the same for FX is the next frontier.