TRADERTALK
Te FX algorithms offer a logic allowing our customers to get more efficient execution when needed. Te market disclosure is next to nil anyway as we have a sustained flow composed of our various clients with various styles of trading. All orders come from our Central Counterparty which ensures client anonymity.
What factors are likely to influence what sort of order routing system you may ultimately decide to use to pre-allocate trades for clients like large asset managers, corporates and real money managers?
Our first step was to have a partnership with Tomson Reuters Trade Notification in order to STP the orders into our clients back office. We are currently assessing what will be the most efficient order routing system to use in order to pre-allocate trades for clients like large asset managers, corporates and real money managers. We hope to deliver this from the second quarter of 2012. Te challenge is to choose the right solution and then to successfully implement it to our environment.
What do you see as the main challenges facing agency brokerage firms like FX Fifty Five who are always seeking to gain the trust of banks whilst at the same time avoid conflicts of interest and provide total anonymity for the buy-side?
It has been an immense challenge to build an FX agency in the 2011 environment. Some of the previous FX agencies have damaged the reputation of the concept by not respecting the banks and on- boarding predatory customers. We decided from inception that we are on the side of the banks as there is to us, no other way. We are not the customer of the banks and consider them as our customer. Tey are instrumental in our business and our partnership with them is built upon finding the right solutions and creating trust. Te anonymity of our setup is a major responsibility as it is our name that will suffer if we don’t protect our LPs.
What steps is your team planning on taking during 2012 to optimize your risk management operations, trading technology architectures and execution pathways?
Our risk is very limited due to our agency model. We have put in place a support team of professionals which we have trained to manage any situation whether it is a hung trade or an emergency recovery procedure. All the messages between the platform and the banks are handled automatically. We plan to double this team in 2012.
192 | january 2012 e-FOREX
How do you see the institutional electronic FX marketplace evolving over the next few years and do you predict any significant changes in the way most trading firms will elect to be connected to their clients and trading venues?
Te electronic FX marketplace has seen exponential sustained growth in volumes in the last decade with the added participation from the retail market, the high frequency arena. FX is also gaining in status as an asset class amongst institutional fund managers mainly during the Lehman brothers crisis.
Trading firms are now looking into aggregated pools of liquidity to provide them with better price transparency and connectivity.
Te main evolution foreseen is the competition emanating from non-bank price makers providing pricing in the same way that traditional EFX banks would and the reverberations it would cause. Te role of EBS/Reuters as a market place and the active impact of high frequency traders have with the traditional EBS users.
Te way buy sides/sell side fims connect to clients and trading venues will not drastically change but with the advent of new technologies we are sure to have more centralised hubs of trading globally for all client segments.
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