FX market will be 70% electronic by year-end, says Aite report
FX Week, September 2013 – Electronic trading continues to gain traction in the foreign exchange market and could account for as much as 70% of all trading by the end of 2013, but this growth does not herald the end of voice trading, according to a new report by Boston-based research and advisory firm Aite Group.
The report, Electronic FX market 2013: Ready for a revolution, is based on interviews with banks, brokers, technology vendors, execution vendors and different client segments. Electronic trading already accounts for more than 60% of the FX market but while that number will continue to grow, voice trading often retains a bigger role when it comes to larger trades, the report points out.
“During times of severe market volatility, it is common for clients to rely on their relationships with banks to get much-needed colour into where the market is headed and to get it via voice. This was certainly the case in 2009, when, following the record volume of 2008, the dramatic dislocation of the general global economy created much uncertainty in the marketplace, leading to widened spreads and lower trading volume. During this time, reliance on high-touch, voice-driven trading became crucial for clients seeking to navigate market uncertainty,” the report states.
The report also addresses the evolution of new price discovery and trading models, suggesting the future will favour newer entrants such as Molten Markets, ParFX and LMAX Exchange, which are predicated on increasing transparency and fairness in market participation.
“The market is being driven by a revolution of greater transparency, more efficiency and a pressure on prices, which is a reflection of the times,” says Aite Group analyst Javier Paz, who cowrote the report with Howard Tai and Sang Lee. “There are two main areas of division in the client base: those that are comfortable competing with the ultralow latency environment and those that are not. Venues have responded by blowing the welcome mat away from high-frequency traders and hedge funds that primarily do things the ultra-low latency way,” Paz says.
“The Aite Group study is extremely timely,” says David Mercer, chief executive of LMAX Exchange in London. “The FX marketplace is undergoing unprecedented change: newly emerged trading models are challenging the establishment by offering increased transparency, and more reliable precise execution that existed for years in other asset classes.”
For further information please contact:
LMAX Exchange (London):
Barbara Pozdorovkina T: +44 20 3192 2510 E: [email protected]
About LMAX Exchange
LMAX Exchange Group is a dynamic, visionary and award-winning financial technology company. Recognised as one of the UK’s fastest growing technology firms, LMAX Exchange is leading the transformation of the global FX industry to transparent, fair, precise and consistent execution. Operating one global marketplace for trading FX, metals, indices and commodities, LMAX Exchange delivers open access, transparency and a level playing field to all market participants.
LMAX Exchange Group offers all clients the ability to trade on LMAX Exchange central limit order book, driven by streaming no ‘last look’ limit-order liquidity from top tier banks and non-bank financial institutions. Servicing funds, banks, brokerages, asset managers and proprietary trading firms, LMAX Exchange offers an anonymous, regulated, rules-based trading environment, order execution in strict price/time priority, and access to real-time streaming market and trade data, enabling all market participants to control execution quality and total trading costs.
Offering a comprehensive range of instruments and ultra-low latency execution, LMAX Exchange operates a global FX exchange infrastructure with matching engines in London, New York and Tokyo.
LMAX Exchange - a unique vision for global FX.
Financial technology awards:
2017 Best FX Trading Venue - (ECN/MTF) – Fund Technology and WSL Awards more
2016 Best Trading & Execution Technology – HFM US Technology Awards more
2013 Best Overall Testing Project – The European Software Testing Awards more
2011 Best Trading System – Financial Sector Technology Awards more
FX industry awards:
2018, 2017, 2013 Best Execution Venue – Forex Magnates Awards more
2017, 2016, 2015, 2014, 2013 Best FX Trading Venue - (ECN/MTF) – WSL Awards more
2017, 2016, 2015, 2014, 2013 Best Margin Sector Platform – Profit & Loss Readers' Choice Awards more
2014 Best Infrastructure/Technology Initiative – WSL Institutional Trading Awardsmore
Business growth awards:
2016, 2015 Winner – Deloitte UK Technology Fast 50 more
2016, 2015 Winner – Deloitte EMEA Technology Fast 500 more
2015, 2014, 2013 Fastest Growing Tech Company in the UK – The Sunday Times Tech Track 100 more
LMAX Exchange Group is the holding company of LMAX Limited and LMAX Broker Limited.
LMAX Exchange is a trading name of LMAX Limited, which operates a multilateral trading facility, authorised and regulated by the Financial Conduct Authority (firm reference number 509778) and is a company registered in England and Wales (number 6505809).
LMAX Global is a trading name of LMAX Broker Limited which is authorised and regulated by the Financial Conduct Authority (firm reference number 783200) and is a company registered in England and Wales (number 10819525).