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FOCUS


technology charges and market data charges. We try to create as little friction as possible in terms of getting clients on board but the issue of charges and fees and incorporating them in our business model is something we constantly look at,” adds Goodbody.


Another aspect of the platform that is constantly assessed is the operational side. “Tere is always room for improvement,” says John Miesner, head of sales at Hotspot FX. “A lot of the work that we do is what the clients don’t see, in the back office, so that the platform operates as efficiently as possible. In terms of the front-end, continual improvement is important but perhaps not as important as it is in equities ECNs. For example, transaction cost analysis (TCA) is becoming a much sought-after service for the buy-side in the equities markets due to the increased regulatory focus on best execution requirements. And while ensuring that all avenues of available liquidity are explored in the execution process is still something that is pursued in FX, it is not yet mandated to the same extent as in equities.”


Conclusion


Te regulatory landscape is likely to change in FX as it has elsewhere in the financial world and these changes could impact on the adoption of the ECN model, says Goodbody. “Tere is still a lot to be determined as FX products are brought more in line with other asset classes. For example, while the FX spot market may not be directly impacted by the Dodd Frank Act, there are sure to be many spill over effects that will touch all parts of the FX market. And it is clear that the multi- participant, electronic platforms are what the regulators would like to see more widely adopted by the market,” he says. “Voice-based dealing and single bank platforms are still essentially over-the-counter in nature and the regulators would like to see a more exchange-like environment. And there is also a growing demand for best execution and a more transparent and electronic record of trading activity. I think this makes it an exciting time to be in the ECN space – it is a dynamic environment and the push towards more regulation is part of the general trend we are seeing of the market’s acceptance of the ECN model,” concludes Goodbody.


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