FEATURE
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On the functioning side, aggregation platforms have had to cater for clients’ increasing demand for customisation. “Te aggregation system has to allow them to put their own native code into it and to work with their own business logic. For example, firms will have their own rules to ensure around venue protection to avoid hitting the same venue twice. Tere is also a greater use of post-trade data for troubleshooting unfilled orders and also monitoring best execution.”
In terms of managing the post-trade data challenges, the task is not so much the collection of the data (something which had proved difficult in the past in the over-the-counter FX market) but in ensuring that the data is sent to the right risk management system. “Te aggregator must therefore have the ability to push the right trade confirmation to the right client system,” says Gozlan.
Customisation
Gozlan agrees that the use of dark, lit or grey liquidity sources is a subject of increasing debate within the FX industry. For the aggregation service providers it merely means more of a focus on catering for more customisation. “We manage the fact that the liquidity venues will publicise only sections of their book depending on certain conditions and factors. And they will vary the rate at which this information is made available. As an aggregator it is all about how you package the service.”
For example, if a firm trades through an ECN, you have to know how that flow is organised, says Gozlan. “What has become clear is that the rules of the game are not the same for everyone. Tis realisation is why firms now want their own aggregation platform rather than an off-the-shelf product or a platform that is part of an all- in-one liquidity management system. It is important for the aggregation platform providers therefore to know how the clients want their systems to work and to be able to fine-tune their offerings to these demands.”
Harry Gozlan
“Firms now want to know much more about how orders are priced and routed against the single
bank venues so it is about aggregating multiple bilateral services and micro-managing those services.”
38 | october 2011 e-FOREX
For the likes of smartTrade it is really a question of internal design, says Gozlan. “Te first generation of aggregation platforms struggled to implement this engineering but now it is crucial that the platform providers can integrate with the clients’ own systems in a matter of weeks. Tere are still some clients that require a straight-forward, rigid platform but generally it is the role of the provider to offer a platform that is open and flexible. It should then be up to the clients to set the rules and for the provider to offer the services to do that.”
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