Skipping the middle man - will you be joining the FX ECN party? >>>
in the speculative community, which leads to more demand for bank price making, which helps everyone’s bottom line.”
Tis efficiency is an obvious benefit for FX traders who are being increasingly attracted to the ECN trading model says Sangiovanni. “Te more efficient a marketplace and the more efficient the exchange of pricing information between buyers and sellers, the more amenable the marketplace becomes to the ECN model and the attraction it offers traders in way of applying their strategies. ECNs that provide a combination of reliable price makers and a diverse pool of participants will differentiate themselves and attract more liquidity and more volume.”
Tere are some bridging questions for brokers and traders to address in terms of improving connectivity to ECN platforms. And when bypassing bank dealing desks and connecting directly to ECNs, a trader or broker might be concerned they are losing something, says Sangiovanni. “First, for most ECNs, participants are responsible for maintaining sufficient credit with all eligible counterparties on those ECNs. But GTX is able to perform pre-trade credit checks because GTX tracks available credit between the central clearers, prime brokers, and client firms in real time.
“Second, liquidity in FX is fragmented not only across traditional ECNs but also across internal pools at banks and other institutions. Simple aggregators are not able to distinguish liquidity providers that have natural interest from those that are in turn reflecting liquidity from yet another pool. GTX solves the problem because it is a hybrid of firm, anonymous ECN liquidity, side-by-side with external liquidity providers backed by unique pools.”
Tere are a number of different fee and commission structures available from different ECNs including per-million fees, flat fees or having fees “baked in” to the price, depending on the participant’s specific accounting, budgeting and reporting requirements. But the primary differentiators for ECNs will always be speed, ease of execution, currency pairs offered and credit availability says Sangiovanni.
Te trading technology and architecture within an ECN platform is also a way to attract more market share, says Sangiovanni, particularly if they
Vincent Sangiovanni
“ECNs that provide a combination of reliable price makers and a diverse pool of participants will
differentiate themselves and attract more liquidity and more volume.”
are able to facilitate best execution. “GAIN GTX’s aggregation and credit engine represents a new ECN- hybrid architecture which acknowledges that FX is a relationship business, and while often you may need to deal many small tickets into a pool of ECN liquidity, you may also need to preserve your direct/disclosed counterparty relationships in a healthy, sustainable dealing environment. You should not have to carve out your credit and set up multiple circuits and GUIs and APIs just to execute your business in these various ways. It goes without saying that an ECN-linked aggregation service should offer all the fundamental order types and market data protocols including full
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