By Guy Hopkins Founder, FairXchange
By Guy Hopkins Founder, FairXchange

Counterparty collaboration

Exploring new ways to deliver deeper insights into your FX trading operations

First Published: e-Forex Magazine 86 / Liquidity Management / May 2019

Let us begin with an uncomfortable, and perhaps surprising, truth: it is exceptionally hard to make money as a competitive market maker in Foreign Exchange. It requires enormous ongoing investment in technology and staff to be able to build a sustainable business. Why should this be? Why is it quite so hard, given the size and global reach of this largest-of-all markets? There are two significant underlying reasons: firstly, consider the size of the ecosystem and the number of ways there are to trade FX electronically – ECNs, single dealer platforms, via API with banks, non-bank liquidity providers and brokers, EMS multi-bank platforms, direct or via algos, the list goes on. Competition for volume is intense and margins are consequently razor thin. Secondly, aggregation technology has inverted the traditional liquidity model, where the biggest core players would have access to wholesale pricing that was tighter than that available to their customers – the liquidity consumers - at the...continued

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