What’s happening with ECNs?

Last year saw a proliferation of new FX venues with no less than five FX ECNs going live, as well as some important changes to trading protocols of existing ECN venues.

These changes and new venues reflect the heterogeneous nature of the $5.3trn/day global FX market, as venues setup to attract, retain or exclude certain types of market participant, or level the technology playing field and redress the balance between the needs of their core liquidity providers and the requirements of their customers.

Existing FX ECNs have also been feeling the pain over the past year, with both EBS and Reuters Spot matching daily volumes dropping to new multi-year lows in December.

However, despite the overall size of the FX market, these new venues (not to mention the incumbents) have to move fast in order to attract, retain and grow their volumes.

New FX ECNs that launched last year

The need to deliver fast, and to quickly support new product releases and change in trading protocols are some of the reasons why FastMatch who are co-owned by FXCM, BNY and use Credit Suisse’s Pathfinder matching technology, announced today that they had selected Caplin’s FX Motif as the starting point to develop their new electronic distribution platform for its spot FX matching service.

Dmitri Galinov, CEO of FastMatch, says: “Our platform is based on the technology underpinning the world’s largest equities crossing system. So when it came to the front end we needed to implement an equally impressive solution. When we looked into it, there was only one vendor we trusted to deliver to our standards within the time and budget constraint.”

Richard Leader, Caplin’s Executive Vice President, Americas, says: “The win is significant because it marks Caplin’s entry into a new arena: front-ends for non-bank trading platforms – a compelling segment, given the regulatory push in this direction and the proliferation of firms offering these services, especially in the U.S.”

More here