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.”
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About LMAX Exchange
Recognised as one of the UK’s fastest growing technology firms, LMAX Exchange is the leading MTF for FX, authorised and regulated by the FCA. Servicing funds, banks, brokerages and asset managers, LMAX Exchange delivers firm liquidity, anonymous exchange quality execution and a secure, transparent level playing field to all market participants, regardless of status, size or activity levels.
The LMAX Exchange open order book is driven by no ‘last look’ limit-order liquidity from top tier banks and non-bank financial institutions. Orders are executed in price/time priority with real time streaming continuous market and trade data published to all members. Offering a comprehensive range of instruments including spot FX, precious metals, commodities and equity indices, 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.
Business growth awards:
2016, 2015 Winner – Deloitte UK Technology Fast 50 more
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2015, 2014, 2013 Fastest Growing Tech Company in the UK – The Sunday Times Tech Track 100 more
LMAX Exchange has been recognised amongst the UK’s fastest growing technology firms for three consecutive years. Tech Track 100, compiled by Fast Track annually and published by the Sunday Times each September, lists Britain’s 100 fastest-growing private tech companies based on sales growth over the last three years. close
2016, 2015 Winner – Deloitte EMEA Technology Fast 500 more
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FX industry awards:
2017, 2016, 2015, 2014, 2013 Best FX Trading Venue - (ECN/MTF) – Fund Technology and WSL Awards more
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2016, 2015, 2014, 2013 Best Margin Sector Platform – Profit & Loss Readers' Choice Awards more
LMAX Exchange has been awarded The Profit & Loss Readers’ Choice Awards “Best Margin Sector Platform” for four consecutive years. These awards are voted on by the readers and recognise excellence within the foreign exchange industry throughout the previous year. close
2014 Best Infrastructure/Technology Initiative – WSL Institutional Trading Awards more
LMAX Exchange has been awarded The Wall Street Letter Institutional Trading Awards “Best Infrastructure/Technology Initiative” in 2014. WSL awards honour excellence among providers to the institutional trading industry. close
Financial technology awards:
2016 Best Trading & Execution – HFM US Technology Awards more
The HFM US Technology awards recognise hedge fund technology providers that have demonstrated exceptional customer service and innovative product development in the past 12 months. close
2013 Best Overall Testing Project – The European Software Testing Awards more
2011 Best Trading System – Financial Sector Technology Awards more
The FST Awards recognise excellence and innovation in the field of information technology within the UK and EMEA financial services sector. close
LMAX Limited operates a multilateral trading facility (MTF). Authorised and regulated by the Financial Conduct Authority, FCA Registered no. 509778.