The decade long battle between single bank and multi-bank platforms has taken a very interesting turn in the last 12 months. The reason: A sudden influx of FX ECNs came into the limelight. The multi-bank players performed a key role in the overall sophistication of the market as flexible and innovative ideas came into being, resulting in the waking up of the development teams in R&D labs of the banks. The Multi-bank players dried up in the latter part of the last decade, but significant changes in the operations of the market and new entrants into the FX markets now mean that it’s an open playing field again.
We’ve examined this trend closely in our recently published quarterly report, and managed to check in which direction the wind is blowing, assisted by the industry’s leaders’ views on the subject. John Owens, VP Exchanges and ECNs at TNS, a firm which provides connectivity to banks and ECN brokers, is for one in opinion that “plain vanilla trading will gravitate towards the multi-bank platforms, while the single bank platforms will maintain a presence to provide the added level of customer service and care required for dealing with more complex trades”. To back up the current situation we bring comparative data, alongside disclosed and estimated numbers from the heart of this industry.
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Phil Weisberg, founder of FXall and a veteran in the ECN space, believes that “while there’s no optimum number of platforms, consolidation in that field is likely to continue”. And thus, technology and regulations have created a new framework and benchmark for service providers. The new platforms’ ability to stay on top of the game and adapt to the new rules and regulations will be a single determining factor in their survival.