The Electronification of FX Trading; Déjà vu All Over Again

Dices cubes with the words SELL BUY, one-euro coins and a financThis week, the Financial Times published a little piece of déjà vu in an article about FX trading rapidly moving towards electronic trading. Electronic trading has been around in FX for years, but many banks still rely on voice traders for larger transactions, especially in the $2 trillion spot market. That is changing, however, as recent compliance blunders and violations of customer trust by opportunistic FX traders are forcing change from the top down. The déjà vu part of this story is that it parallels the market making scandals in equities of a decade ago, and the Libor scandals of 2012.

Automation and electronic trading are the obvious end game for all kinds of trading, with the pace of change being determined by the profitability and risk associated with holding on to aging business models. In each asset class, the move will be made as fast as is warranted by customer demand for faster and fairer trades, increased competition, and the costs (both financial and reputation) of regulatory violations.

In the last year or two we’ve seen leading global and regional banks quickly ramp up their efforts in the area of modernizing their FX trading platforms, and many have turned to our technology. In fact, 3 of the top 4 FX trading houses, responsible for more than 40% of all FX trading, have already selected Solace for their next-gen trading infrastructure. Solace’s unique combination of speed and robustness has been met with enthusiastic response by both business leaders and technical staff within these firms.

To find out how our technology improves the capacity, performance and robustness of FX trading platforms, check out our FX web page.