The low cost provider of multiple FX liquidity sources, FXSpotStream, has seen record trading activity in the month of June. The US-based financial services provider has been defeating the odds, as its peers relish the impacts of low-volatility resulting in declining volumes. FXSpotStream reported to Forex Magnates that its trading volumes spiked 230% YoY in June.
The multi-bank aggregation service was established in 2012, headed up by industry veteran Alan Schwarz. FXSpotStream aims to provide zero-cost trading to participants with simple and easy connectivity to its liquidity providers. The model is clearly working as the venue has seen performance jump in both May and June. In addition, the firm has seen growth in the number of clients, which were up 90% in June on a YoY basis.
Mr. Schwarz commented in an emailed statement: “FSS has seen tremendous growth in volume and clients. Despite the low-volatile trading environment, we have seen our existing clients increase their trade flows through us and we have added volume from new clients. ADV in June hit another all-time record exceeding the prior record set in May by 15.5%. And, YOY June ADV was up 230%.”
The FX aggregation provider does not publicly disclose its trading volumes.
The bank-led consortium that co-exists with its founders has been enhancing the number of liquidity providers available on its network. French bank, BNP Paribas, was the latest institute to join the vast number of liquidity providers. BNP Paribas takes the total number to nine, other banks include, BofA Merrill Lynch, Citi, Commerzbank AG, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley and UBS.
FXSpotStream offers its users a unique fee structure. The solution competes with Direct API connections that offer no-transaction costs, however it eliminates the connectivity costs. Mr. Schwarz spoke about the challenges firms face during a telephone interview, both from a monetary and workload perspective when connecting to liquidity providers.
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“FSS is a simple solution that offers a better pricing option, low cost, easy to connect and stable trading offering. It’s all about KISS, keep it simple stupid. We devised FSS to co-exist with our founders and liquidity providing bank partners, the world’s largest FX banks,” added the CEO.
Cross-connect costs to major data centers could add to a firm’s bottom-line. With most trading firms connecting to London, Tokyo and New York hubs, annual costs could exceed $30,000 per connection (depending on the number of liquidity providers and back-up connections).
“FXSpotStream’s structure and business model is unmatched in the industry. We are able to transact with our clients directly using bespoke streams over a fast, stable and reliable infrastructure from locations in New York, London and Tokyo and do so with no brokerage charge. We have a strong commitment to seeing the business grow as it complements our objectives to reduce the costs we and our clients incur in transacting with each other,” noted Richard Anthony, Global Head of FX, eRisk, GFX at HSBC, in a statement.
FXSpotStream is built on smartTrade’s technology, a leading interbank technology vendor. Recently the two firms reported the launch of a new sophisticated liquidity solution called 4XBox. The new solution provides existing streaming liquidity via a single connection and significantly reduces the cost and time to market. Harry Gozlan, CEO of smartTrade, spoke about his firm’s offerings in a statement: “Our technology solutions are used by some of the largest FX market participants and banks in the market and have been proven for functionality, scalability and redundancy.”
The institutional platform arena saw a proliferation of venues launch in 2012, current trading conditions have put pressure on margins and a slow down in activity adds to the burden firms face in the FX markets. However, FXSpotStream acts differently, apart from its upbeat trading metrics, the firm reported that it will be extending its global footprint with a physical presence in the world’s largest FX center.
Furthermore, the firm is expected to enhance its product range to include currency forwards and swaps. It also reported that Logiscope is now available as an additional STP provider.
Mr. Schwarz concluded, “The next few months will see a number of additions at FSS, we are extending our global footprint and enhancing our product range, since launching over two and one-half years ago FSS has gone from strength to strength.”