The race to redefine FX trading is on. According to the recent Coalition Greenwich report, multi-dealer platforms (MDPs) are poised to overtake single-dealer platforms (SDPs) in spot FX trading in 2025 – a stark reversal of recent years where SDPs dominated. 

Amid these changes, banks need to adapt so they can meet their clients wherever they are and deliver on best execution requirements. To get ahead of the competition, banks need to upgrade their technology to enable faster price discovery, bespoke price creation and improved risk management. At the same time, we’re seeing more sophisticated buy-side firms utilising API first architecture to directly embed banks’ services and functionalities into their own workflows, creating new opportunities for dealers, provided they have the right technology.  

The message is clear: future success hinges on mastering MDP, SDP and API trading ecosystems. The key lies in leveraging venue-neutral, multi-channel technology to build a robust distribution platform. From there, banks can focus on delivering a unique trading experience tailored to their clients – on any platform, in any environment. 

Mark Suter, executive chair, Digital Vega 

In 2025, we expect the see the FX options market automate further, with more regional and private banks implementing workflow automation technology solutions. As their clients want to trade electronically and trade sizes reduce, many banks are having to implement technology to manage a larger volume of price requests and more tickets to process. A key focus for Digital Vega in 2025 is to continue to roll out our white label electronic platform to client banks. This increases workflow efficiency and capacity, and also allows banks to price trades themselves or source prices from our multibank platform, which enables increased currency coverage. 

Next year will also see the full production launch of our FX options CLOB. We have spent a long time developing the platform and conducting client testing but held back from a full launch until we could rely on deep liquidity on day one. Now we have most of the main trading firms connected we expect to launch in early 2025. As the CLOB makes interdealer trading more efficient we think that the whole of the FX options market will benefit from increased liquidity and overall volumes will grow as a result. 

Stephan von Massenbach, chief revenue officer, DIGITEC 

The FX swaps market is migrating to electronic channels, and we expect the pace of change to continue through 2025. Clients want to trade FX swaps in multiple currencies, and tenors beyond overnight and tom-next, and banks will only be able to service clients efficiently by implementing scalable technology solutions, where workflows are largely automated – in data, pricing, distribution, and settlement. Also, the velocity of the underlying market has increased which means that banks using Excel to manage their FX swaps books are now turning to technology solutions to keep pace. SaaS technology deployed in the cloud has reduced the investment required to provide accurate and fast FX swaps pricing. 

Interdealer FX swaps trading, which is dominated by the broker market, has begun to migrate to electronic venues, like 360T SUN and LSEG Forwards Matching. We expect more volume to migrate to electronic channels in 2025. 

David Mercer, chief executive officer, LMAX Group 

The foreign exchange (FX) market remains a cornerstone of global trade, yet its pace of innovation lags other areas of capital markets. Despite representing the lifeblood of international economies, significant portions of the market remain untouched by the latest technology and innovation. This leaves ample opportunity for modernisation through blockchain technology as we see increasing fusion between TradFi and decentralised finance.  

Simplified and automated solutions could transform FX, enhancing global price discovery and market access. Looking ahead, there is enormous potential for decentralised models to reshape FX as we know it. Tokenisation would facilitate more dynamic and transparent trading, addressing inefficiencies and increasing participation from diverse players. As sovereign nations strive to maintain control over their currencies, FX innovations can bridge the gap between national interests and meet the demand for a seamless global marketplace. 

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Bloomberg’s foreign exchange electronic trading platform (FXGO) BMatch solution will provide spot matching functionality to the local interbank community for US dollar against the Nigerian naira.

The solution allows anonymous orders to be placed into a central limit order book, which are displayed and then matched with counterparty orders based on mutual trading limits and other specificities from each bank.

Banks can integrate the offering with their middle- and back-office systems.

Bloomberg added that consolidated trade statistics can also be calculated and made available to the market.

“We are pleased to partner with Bloomberg at this critical phase of the FX market reforms being undertaken by the CBN to enhance the price discovery process with the adoption of the Bloomberg BMatch, a more efficient FX pricing system in the market”, said Omolara Omotunde Duke, director of financial markets at CBN.

“The BMatch will provide a robust oversight function for the central bank’s market surveillance activities and deliver better transparency on the prevailing market determined exchange rate. This will be supported by the adoption of the Nigeria FX code by market participants to promote ethical FX market activities.”

FXGO is Bloomberg’s multi-bank FX trading solution providing access to liquidity through real-time pricing, workflow solutions and analytics for price takers worldwide to negotiate FX transactions with their bank relationships.

FXGO offers streaming or RFQ for spot, outrights, swaps, NDFs, deposits, precious metals and options in any currency pair and tenor, alongside providing access to algorithmic order solutions from over 30 providers.

“We are proud to support CBN with our tailored BMatch solution and deliver with it increased transparency, liquidity and efficiency for the Nigeria FX markets,” said Tod Van Name, global head of FX electronic trading at Bloomberg.

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We need to take a step back and look at today’s trading desk. By dissecting a trading desk into its functions, processes, and tasks, it becomes clear that 80% or more can be successfully automated with today’s technology – and that figure is just for the front-office, potentially even higher in the middle- and back-office. We first need to envision how the job will evolve in the coming years. I envision the trader’s role converging into a multifaceted position where responsibilities traditionally spanning from the front- to the back-office will be seamlessly integrated and executed with the aid of technology.

These technological advancements will profoundly impact our industry and give rise to a new kind of role: the “domain jack of all trades.” In other words, traders will likely become more akin to product owners. Being a market expert and knowing all the ins and outs of trading will no longer be sufficient. Instead, we will need to be familiar with all aspects of the business, from legal and settlement processes to transaction cost analysis and trading. This implies that fewer people will be needed to run a trading desk end-to-end, with more operations running as a one-man show, relying on the interaction of a human and a multitude of specialist systems or AIs. 

So, what are the skills of a domain jack of all trades? 

By definition, many, but the key ones I believe will be relevant are: 

Project Management Skills: The ability to manage multiple tasks, prioritise efficiently, and oversee the implementation and maintenance of automated trading workflows.

Adaptability and Curiosity: Flexibility to adapt to new market and regulatory conditions. A continuous drive to learn about every single corner of the business and market. This adaptability will be essential in an environment where change is constant and rapid.

Technical Skills: While traders may not need to program large-scale applications, the ability to retrieve and analyse data will remain vital. Skills in basic programming or systems knowledge will be necessary for tasks such as manual overrides, improvements, and customisations. Understanding technology will be crucial for validating automated workflows.

Soft Skills: Strong communication skills to convey complex information to diverse stakeholders. Problem-solving and creativity to navigate and innovate within complex systems. A holistic business understanding to see the broader picture and integrate various aspects of the business effectively. This is, and will likely continue to be, a people business, requiring strong interpersonal skills to manage relationships and collaborate effectively.

The interesting aspect of this vision is that no single degree can prepare you for this. It is unrealistic to expect a trader to be formally trained in finance, software engineering, and law to do the job. Therefore, either education will need to become significantly more industry-focused, or firms will have to identify and develop new talents to become the domain jack of all trades.

The trader of the future will be a multifaceted professional, adept at integrating technology, traditional market expertise, and a broad understanding of the operational aspects of the business. This evolution will streamline trading operations, creating more efficient and dynamic trading desks powered by human-AI collaboration.

How can firms ensure that their traders receive the necessary support to do so?

We have two aspects to consider, how our firms will develop domain jack of all trades within the existing workforce and how will we recruit them. In terms of development, I work for an organisation that has successfully cultivated domain jack of all trades for years. What I have seen is that ownership is what transforms a great employee or trader into a do-it-all, all-terrain expert; giving more responsibility and freedom only brings the very best of people as far as the firm’s mission is clear to everyone in the organisation, which is the case of NBIM – with the added advantage of having a common goal.

As a trader, this ownership can mean taking full responsibility for an asset class and/or a region. This includes managing counterparty relationships, overseeing internal processes, making key decisions, and communicating across various stakeholders. Effectively, you own a start-up within a larger organisation. This setup naturally drives innovation, improves how things are run, and maximises returns. Because of this, I believe that firms with a flatter structure are better positioned to foster ownership and hence develop successful domain jack of all trades.

Additionally, rotations or secondments across all seniority levels have been widely popular and highly effective tools. They not only support the development and future-proof our workforce but also cross-pollinate best practices. This exposure to different parts of the business helps traders develop a broad skill set and a deep understanding of the entire trading operation.

The other aspect is how do we recruit domain jack of all trades. It is obvious that the old-school interview rounds, and brain teasers and esoteric questions are no longer relevant. Hiring will likely become a lot more expensive. New grads will probably be hired from summer internships or similar programs where we can evaluate individuals over a longer time horizon. Finding well-rounded candidates for trading roles will be very difficult with short hiring processes.

How do you expect traders to adapt to software engineering requirements in the future?

The claim that traders will speak the language of software engineering is becoming increasingly true. However, it’s essential to understand that software engineering encompasses much more than just programming. While AI might handle the bulk of coding tasks, there will always be a need for scripting and integration. If we consider the trader as the conductor of an orchestra of AIs, the need for software engineering becomes much more apparent. The trader, as the domain expert, will need to resort to engineering principles to design and aid in the development of trading workflows and systems.

Traders of the future will need to develop a robust understanding of engineering principles to collaborate effectively with technical teams and machines. This shift will enable them to design, develop, and manage complex trading workflows, leveraging the full potential of AI and automation. As the conductor of an orchestra of AIs, the trader’s role will evolve to integrate technical expertise with market knowledge, driving innovation and efficiency in trading operations.

In your Oxford style debate, your opponent is arguing AI will fill the role of coding and traders will go back to the phones – what do you think will happen?

I think Armon-Jones uses the phone as an analogy for the business getting even more relationship based. With increasing process and decision-making automation in trading, I cannot see this evolving in that direction – unless the trader makes a script to instruct the systems to route volume based on what broker took him/her out for lunch that week, in which case the trader would need to know how to program!

If voice trading is supposed to save the role of the traditional trader, we should see this role growing significantly over the next couple of years. Unfortunately, the opposite is true. Looking at current trends and how the future is shaping up, there will be a reduction of workforce at the trading desks. When that reduction of personnel required to run a trading desk becomes its minimum, it will converge to the trader as the conductor of an orchestra of AIs or the “domain jack of all trades”. It sounds scary, but also it opens lots of exciting possibilities and new roles in the industry.

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CCS trades have notable settlement risk exposure linked to the high value of the initial and final principal exchanges. Settling these trades on a gross bilateral basis also results in operational inefficiencies and liquidity constraints.

The CCS service can be used in conjunction with post-trade processing platform MarkitWire to integrate CCS flows into CLSSettlement, providing the ability for participants to benefit from multilateral netting against all FX transactions.

As a result, this leads to an optimisation of liquidity, alongside a reduction in daily funding requirements.

“We look forward to leveraging CLS’s CCS service to optimise liquidity and mitigate settlement risk,” said Pierre-Jean Benazech, global head cross CCY swaps trading at Société Générale. 

“The unique PvP settlement system and netting capabilities mark a positive step forward in our efforts to optimise our foreign exchange operations.”

Read more: Barclays connects to CLS’s cross currency swaps service

The service has experienced exponential growth, with the values of CCS submitted to CLSSettlement up 87% year-on-year in Q3 2024.

CLS added that the growth in its service also supports the efforts of policy makers and regulators who promote broader adoption of payment-versus-payment (PvP) mechanisms to reduce FX settlement risk and systemic risk in the OTC derivatives market.

“We are delighted that Société Générale has gone live on our CCS service. Participation in the service underscores its effectiveness in enhancing operational and liquidity efficiencies for CCS trades,” stated Lisa Danino-Lewis, chief growth officer at CLS.

“The growing adoption of this service as well as the growing values submitted indicate that FX market participants are actively pursuing innovative solutions to further reduce settlement risk and improve operational efficiency.”

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A new report from Coalition Greenwich found that buy-side comments with respect to MDPs reflect that the ability to access dealer quotes while keeping them in competition, helps optimise trading.

The growing use of MDPs from the buy-side is driving electronic trading overall and supports their growing focus on best execution.

Over the next year, 34% of respondents stated that their use of MDPs would increase, while conversely, only 5% thought there would be a reduction.

Comparatively, only 16% stated they would increase their use of single-dealer platforms, with 24% stating they would reduce their use of SDPs.

The usage of manual forms of trading, such as chat and voice, are also anticipated to decline, with 23% expecting to decrease their use of chat and 31% decreasing their use of voice in the next year.

“Using electronic execution methods provides value beyond a single trade execution. For example, it is easier to store and capture data about the bids received from dealers when receiving them electronically,” said Coalition Greenwich in its report.

“This ultimately helps a buy-side firm evaluate a broker, whether they executed a particular trade or not.”

When evaluating a firm’s panel of dealers, a buy-side desk may take into consideration various reasons why it may redirect its flow from one to another. Coalition Greenwich found that there were two key reasons why a trader may reduce flow to a dealer: namely, pricing and quality of institutional coverage.

When asked why the buy-side might redirect trade flow, just over 40% of respondents noted pricing as a key consideration. This comes as no surprise with growing concerns from the buy-side about best execution and investments in tools such as TCA to help evaluate their counterparties.

The quality of sales and relationship management was the second highest reason noted by respondents, with 22% citing it as an important element.

The common thread connecting the FX discussion on dealers and MDPs is competition. End users want their dealers in competition with each other to both receive favourable pricing on individual trades and reduce dependence on an individual counterparty, noted Coalition Greenwich.

Elsewhere in the report, Coalition Greenwich found that single-dealer platforms (SDPs) will continue to play a role in the FX trading ecosystem, particularly for complex trades and structures.

However, it was noted that MDPs are likely to remain the preferred choice for routine trades and spot execution.

“MDPs offer a range of benefits, including ease of use, workflow integration and best execution,” said Stephen Bruel, senior analyst on the Market Structure and Technology team at Coalition Greenwich.

“They are an attractive option for buy-side traders who want to optimise their trading and achieve best execution.”

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Munenori Yoshihara, BBH

The development sees Resona become the first Japanese investment manager to implement the FX solution.

InfoFX is a securities-based FX solution that enables automated FX order generation with execution netting capability.

The solution provides support for FX orders across multi-custodian accounts and covers both freely traded markets and select restricted markets.

Read more: Fireside Friday with Brown Brothers Harriman’s… Brendan Burke

Following the onboarding of InfoFX, Resona AM added that it has already seen greater operational efficiencies through trade data transmission and FX netting, as well as improved flexibility in their security-based FX workflow.

“With the launch of InfoFX, our fund managers have gained significant benefits through reduced operational burdens. We expect that these operational efficiencies will lead to enhanced investment performance,” said Resona AM.

Resona AM has also achieved improved oversight and control of its FX trading capabilities through InfoFX Live, BBH’s web-based platform which offers clients with robust pre- and post-trade reporting and analytics tools to assess execution quality.

“Global asset managers continue to look for ways to optimise their trading and operational workflows, so we are thrilled to expand upon our longstanding relationship with Resona Asset Management, a key relationship for BBH in Japan,” said Munenori Yoshihara, head of relationship management Japan and markets Asia at BBH.

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The FX Global Code are a set of industry guidelines aimed at keeping global currency markets fair and transparent.

The Global Foreign Exchange Committee (GFXC), responsible for maintaining standards in the global FX market, has proposed changes to its FX Global Code, which was established to provide guidance on how currency trades are carried out globally, with the goal of encouraging integrity and transparency.

This marks the second iteration of the GFXC’s global FX code in the form of a public consultation, six years on from its inception.

Read more: Key updates to the FX global code to be revealed in October

The FXPA highlighted these updates as being well-intentioned but flawed, namely due to the overly complicated language used in the proposals and the lack of practical detail.

The industry group argues that the GFXC didn’t provide enough background to explain why each rule change is necessary. In addition, the group noted that the 16-day feedback window was tight, given the global and highly regulated nature of the FX market, with participants operating under various regional rules.

Among the proposed rule changes, firms have been encouraged to reduce settlement risk by using a one-size-fits-all method called a “risk waterfall,” which prioritises payment-versus-payment (PVP) settlements.

The FXPA highlights that despite this approach potentially being safer, it may not work in cases where trades happen within a single institution, like a bank settling transactions between its own clients. The association argues that in such situations, PVP could actually increase risk and add unnecessary complexity.

“The GFXC’s suggested updates to principle 35 to use PvP processes where practicable is not prescriptive enough. With vague definitions, every firm will choose to apply its own definition of where PvP mechanism are practicable, leaving settlement risk on the table,” said Alex Knight, head of EMEA at Baton Systems. 

“As we have seen in recent years, there is ample evidence of technologies in deployment right now that facilitate riskless settlement and netting, eliminating many situations where PvP is not possible.”

Basu Choudhury, head of partnerships and strategic initiatives at OSTTRA, agreed that PvP is the preferred method for mitigating FX settlement risk.

“By far the largest proportion of FX trading is conducted with the primary dealers (bank and non-bank), for whom the ‘on-us settlement’ model may not be feasible, and all parties in the chain (non-bank LPs, FX dealer, asset managers and custodians) must deal with and manage settlement risk,” said Choudhury.

“Access and integration to flexible PvP models would enable the asset managers to execute across a larger pool of dealers as daily settlement limits (DSL) could be increased, leading to more efficient execution opportunities.”

Elsewhere, the GFXC has proposed that it wants FX platforms to disclose more information about “client interaction data”. In response, the FXPA argues that the new language is broad, covering too many types of information and leaving room for confusion.

The association also noted that without clear definitions, the rules can be interpreted by participants differently, creating inconsistencies and additional compliance challenges.

The proposed updates would require that all FX trades be governed by a written agreement, with this extending to include minor and/or informal interactions.

The FXPA highlighted that from a practical sense, this could make routine trading much more complicated and slow down transactions reliant on fast communication, such as messaging apps.

The GFXC also proposed changes around how Standard Settlement Instructions (SSIs) are used. The revised rule would discourage the use of multiple SSIs for the same counterparty unless absolutely necessary, with the goal of reducing settlement errors.

Although the FXPA agrees with the sentiment that minimising SSI variations would have benefits, they urge more flexibility in cases where alternate SSIs may be operationally necessary. The associations warns that strict rules on SSIs could make settlements cumbersome without substantial gains in safety or transparency.

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He joins the firm from Deutsche Bank where he served as a currency options trader.

Prior to this, Roberts spent five and a half years at NatWest Markets, most recently serving as a FX derivatives trader.

Elsewhere in his tenure at NatWest Markets, he worked as a US rates strategist.

Roberts announced his appointment in a social media post.

This latest appointment follows that of Olivia Gassner, who was appointed VP, equity electronic sales trader at JP Morgan earlier this month.

Gassner joined the firm from RBC Capital Markets, where she served in the same role for three years prior to the move. 

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Algorithms, especially when developed and managed internally, can significantly enhance the front-office tech stack. They reduce costs, lower market impact, and increase execution transparency. While the primary perception is that algorithms help investors execute orders efficiently, there’s much more to it.

For instance, the additional data collected by algorithms offers endless possibilities. Storing order book updates received at millisecond intervals in a well-designed database enables high-level back testing. Additional data also provides accurate transaction cost analysis (TCA) and supports various data science and possible AI-driven applications to improve strategies and execution. 

Moreover, algorithms help better understand the market, providing investment managers with valuable information to make more informed decisions. Placing quants directly at the desk creates a high-performance, hybrid workspace that significantly speeds up implementation and optimisation. This setup ensures that both quants and investment managers learn from each other, potentially creating a new and more capable type of quantitative investment manager. 

Finally, using algorithms makes your organisation more attractive to top quants in the labour market. Talented young professionals are eager to work on challenging data and tech projects where they can develop their own innovative ideas.

Are in-house algorithmic execution platforms the way forward?

When I look at the current state of the market and see all the developments taking place, I believe this will be the way forward. In recent years, the possibilities for developing your own applications have increased enormously. Combined with the rise in tech-savvy talent, this creates the perfect environment for companies in the sector to develop their own in-house execution platforms.

Having the ability to manage, optimise, and implement your own algorithms allows organisations to retain all associated knowledge internally. This not only provides a significant advantage over peers but also prepares your organisation for the rapidly evolving digital future. An execution platform also grants direct market access to several liquidity providers. With the newly unlocked data from the execution platform, it becomes easy to determine where and with whom to execute transactions. Adding new trading venues or banks is quicker and more efficient compared to traditional methods.

Additionally, your organisation can respond swiftly to new market developments to stay ahead. Creating an in-house execution platform also enables you to establish a high-standard risk management and governance framework tailored to your organisation’s needs.

All in all, there are ample reasons and movements within the market to encourage this trend.

How can technology be leveraged in a way that allows traders to execute the same procedures for all FX instruments?

There are numerous ways and opportunities to leverage the vast pool of available technological applications to achieve this. Therefore, there isn’t a single, clear-cut answer to this question. Previously, there was a trend where many technological solutions were purchased by organisations due to a lack of skills and manpower to build them internally. Nowadays, more organisations employ talented and well-qualified individuals who can develop these solutions in-house.

This doesn’t mean that everyone in the sector is building their own applications and tools for all FX instruments. However, there is a noticeable trend of organisations starting to create their own direct market access and/or TCA tools, which shows promise for potentially serving all FX instruments and also the non-FX instruments.

The market still needs to take some steps to make this possible. For example, in the FX Swap market, we are seeing initial moves where parties are providing streaming prices, which could enable the buy-side to develop in-house algorithms for FX Swaps.

For now, technology can be leveraged mainly in the pre- and post-trade procedures to execute the same processes for all FX instruments. Post-trade data for all FX instruments is already widely available, if not already stored by your organisation. This data can be used to create in-house TCA tools or back testing engines for all FX instruments, helping to improve execution.

In short, the possibilities are endless, and it is up to your organisation to determine how to best utilise them.

What are the main barriers when it comes to reaching this goal?

First of all, the technology must be made available to your employees and easily accessible for them to work with. This involves addressing several risk management, security and architectural challenges. Therefore, having a reliable IT partner with a high service level is crucial. Once your IT landscape is in good order and set up according to the highest market standards, you need talented and well-equipped personnel. Fortunately, there has been an increase in tech talent interested in the financial sector, so this should not be too big of an issue.

A bigger challenge might be obtaining internal approvals and managing your in-house developed procedures, applications, and tools for all FX instruments. While creating and testing these technological improvements can be done quickly and easily, getting the business to actually start using them can be more difficult. This means you need to establish a robust and widely supported risk management and governance framework in collaboration with your internal risk management department.

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Chris Jackson, Yorke O’Leary

OptAxe stated that it is launching the new venue to address fundamental shortcomings in FX options trading.

According to the firm, increased fragmentation in FX trading now presents substantial position distribution and coverage challenges, and places constraints on effective price discovery and execution options.

Elsewhere, the Uncleared Margin Rule and other regulatory requirements mandating initial margining for all trades have raised cost for FX options businesses, with bilateral trading margin requirements heavily impacting balance sheets. 

OptAxes’s solution sources and consolidates the best interest available in the market, in real-time. Axe inventory is aggregated by OptAxes into a single platform, acting as a multi-issuer venue rather than a multi-dealer platform, with RFQ and counterparty disclosure at the point of execution.

“OptAxe is a fully centralised, regulated venue for liquidity discovery, dissemination and execution that empowers trading participants with actionable insights from centralised liquidity information,” said Chris Jackson, chief executive and co-founder at OptAxe.

“We automate manual, bilateral processes and consolidate available axe inventory into a single platform, effectively acting as a multi-issuer, not a multi-dealer platform, RFQ-based venue”. 

The FCA authorisation follows a two-year process from participating in the FCA’s Pathway Programme to gaining a full trading venue licence, compliant with all the regulatory obligations of an MTF, from operational resilience to surveillance, trade reporting and regulatory data reporting.

“With OptAxe, all market participants can easily access a centralised source of actionable axe inventory with evidence-based pricing that meets the demands of the trading community today and tomorrow,” said Yorke O’Leary, chief operating officer and co-founder at OptAxe.

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