The FX market kicked off 2018 on a high note amid rising geopolitical and trade tensions. A number of companies in the industry have been reporting higher trading volumes during the first months of 2018. Over the past couple of years, different companies have been topping the trading volumes growth charts. Among those which are publicly reporting their figures, FXSpotStream is off to a great start in 2018.
The eFX market was dominated by different players throughout the years. The likes of EBS, FXall, Hotspot, and Reuters have been under the spotlight in the beginning and dominated the space until they got more competition. A new generation of eFX trading platforms introduced more flexible products that appealed to a certain type of customers much more than those of the former giants.
Growth and Acquisitions
The likes of Fastmatch and GTX were the fastest growing in 2016 and 2017. This has, in turn, led to both companies being acquired by Euronext and Deutsche Borse. Those raced into the sector starting in 2015 when BATS bought Hotspot FX from KCG before being acquired itself by the CBOE.
This year is yet another one that marks a change in the leadership spot for the fastest growing eFX trading venue. FXSpotStream’s growth numbers in the first six months of the year neared 50 percent from a rather high base already.
The company supported a total additional $1.15 trillion worth of transactions until the end of June and marked an increase in average daily volumes (ADVs) of 48.8 percent.
FXSpotStream’s Growth Detailed
As we identified the sharp spike higher in the performance of FXSpotStream this year, we decided to give a shout to the CEO of the company, Alan Schwarz, for a short interview. He kindly agreed and elaborated on some of the key metrics.
“In June we crossed the $30 billion ADV mark for the first time hitting an ADV high of $30.4 billion. Our ADV in June was up 8.2% month-on-month and 49.5% year-on-year – the largest percentage increase of any cash venue reporting volumes. For the first six months of 2018, our ADV increased 48.80% versus the same period in 2017 reflecting an increase in overall volume of $1.15 trillion in the first six months to a total of $3.56 trillion,” Schwarz explained.
Diversifying a Product Portfolio
We asked Schwarz what is the company’s product portfolio and where does it see key differentiating areas among major eFX trading venues. He shared that adding products, functionality, and staff have been key to supporting growth.
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“Today on our API and GUI we support FX spot, forwards, swaps, NDFs and NDS and Precious Metals spot and swaps. We continue to onboard clients globally who recognize that it makes a great deal of sense to connect to FXSpotStream once and over only one connection in NY, London or Tokyo with up to 13 of the largest global FX banks.
In addition, we have added staff to our offices in New Jersey, London, and Tokyo with the focus on support of our clients and banks at the top of our priority list. The quality of our support remains the highest in the industry and sets us apart from many other venues,” Schwarz explained.
The Future of eFX Trading
Earlier this year, the company launched its new product suite, FXInsights. It delivers real-time data analytics to tackle some business challenges and demands of trading FX and precious metals. eFX firms have consistently been innovating with Fastmatch launching last year its FX Tape benchmark tool designed to provide a centralized stream of FX trading data at a low cost.
Schwarz elaborated on the need for added value tools, sharing that the continued focus on transparency and interest in managing the entire life cycle of a trade have been key drivers in the development of the new analytics tools. The company isn’t planning to stop innovating and has new functionalities planned for next year that is set to be announced in due course.
Artificial Intelligence Still Far Away
As the next area of innovation that the eFX market demands, Schwarz shared that he thinks there has been little innovation in how allocations are supported and significant efficiencies and cost reductions can be achieved with process and functional improvements.
“In terms of big innovations in the electronic FX trading venue, Artificial Intelligence (AI) is still a much discussed but not yet maximized innovation. AI is being leveraged in trading today but it’s still in the early stages. Further, AI can move beyond trading and it’s still something to be harnessed,” Schwarz thinks.
The H2 of 2018 is setting up to be no less interesting than the first six months of 2018. As we are anxiously awaiting the nearing Finance Magnates London Summit in November, the hot summer months and the World Cup are usually a time for a short break for active traders.
The evolution of the regulatory landscape is pressuring retail brokers into looking for new income, but the institutional eFX trading space is unlikely to get impacted much by the upcoming new regulatory framework. The key factors for growth will continue to be related to political and economic developments, and those look to be setting up for another hot trading season.