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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As we peer into the crystal ball for 2024 trading, a notable shift is anticipated with the adoption of T+1 settlement for US equity transactions. This transition is poised to reshape the pace and efficiency of equity trading, promoting quicker settlement cycles. It’s fully expected that the spotlight will turn towards the foreign exchange element, often deemed the least loved asset class. 

Asset managers and traders are expected to re-evaluate FX markets, seeking evolution from the industry to source liquidity later in the trading day around the US close. Concurrently, the need for market participants to embrace technology becomes increasingly apparent. Automation, artificial intelligence, and data analytics are anticipated to play pivotal roles in refining trading strategies and navigating the complexities of across asset classes in this tech-driven financial landscape of 2024.

Daniel Chambers, head of data and analytics, BidFX (an SGX company)

This year has seen investors hanging on every word uttered by central banks around interest rates. Changes in interest rates inevitably drive FX markets. Depending on how markets react to monetary policy next year, and whether volatility returns to FX, there will be an even greater need to actively assess liquidity in a much more granular way. That said, even if FX markets are more benign in the New Year, this will not put a stop to the general trend of hedge funds and asset managers seeking more precise insights from their liquidity providers. 2024 will see investment managers ask why their FX flow has been directed to certain counterparties, rather than passively accepting the liquidity provider’s perspective.

Rather than simply looking at FX flow distribution, investment managers will be demanding insight into the exact rationale behind a certain bid/offer price being offered up at 11:55am just prior to the Bank of England’s rate decision. They will also want to know who is providing the tightest spreads at that exact time, in addition to identifying those at the top of the order book and those displaying a price skew.

Basu Choudhury, head of partnerships and strategic initiatives, OSTTRA

One of the big challenges for 2024, assuming the successful operational migration over to T+1 for US securities in May, is how will the FX markets (execution venues, makers and takers, intermediaries) react to the compression of execution times in the context of constrained settlement relationships? What will this imply for post-trade processing (matching and settlement) and provisioning of credit, the life blood in FX markets? The shortening of the settlement cycle for US equities and bonds brings settlement risk into sharp focus for FX participants. What challenges will Asian and European asset managers face with their FX overlay process? It is likely that currency risks and costs will increase for the end customer.

When buying US stocks, from an FX perspective, in order to fund the purchase of the stocks, the investment manager will need to convert their Singapore dollars into US dollars within a compressed timeframe. Therefore, to mitigate the risk of failing to settle due to not having enough dollars to pay for the stocks, some key questions will need to be addressed. For instance, at the time they need to execute FX transactions which liquidity pool and how many counterparties can they execute with in order to acquire the USD in time for DvP settlement?

Vikas Srivastava, chief revenue officer, Integral

The introduction of T+1 in North America in May 2024 understandably occupies the thinking of technology officers and heads of desks for their FX trading activities. The challenge primarily sits with those asset managers in Europe and APAC trading in US markets who will have a matter of hours to match and settle both the equities and FX leg of the trade in order to settle T+1.

The only real solution to this issue is automation of trading workflows. Banks should see this as an opportunity to better serve their clients in their hour of need by directly embedding their services into their buy-side clients’ workflows. Banks should be looking to partner with technology firms that enable them to embed their FX services via API in their clients’ processes.

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Groupama Asset Management is set to expand its use of Virtu’s Triton Valor EMS to another asset class, now encompassing fixed income trading.

The move comes off the back of continued electronification of the fixed income space, according to Eric Heleine, head of trading at Groupama AM, with the business’ workflow moving away from chat and telephone and as a result seeking a more centralised approach to execution management.

“Virtu’s Triton Valor EMS provides us with a single view that brings together all our workflows including electronic RFQs, automated execution, and negotiated trading and provides us with tools to aggregate real-time feeds, liquidity sources and valuable pre-trade analytics to make trading decisions faster and with confidence. It’s the key to success if we want to enhance the FICC market structure which has largely stayed the same for the last 50 years,” said Heleine.

Read more: Buy-side market data costs on the rise as asset managers tap fixed income, equities, and ETFs for the greatest spend

Triton Valor supports trading across: Munis, MBSs, global corporate and sovereign bonds, fixed income ETFs, EM debt, futures and CMOs, aiming to allow users to utilise a single dashboard across asset classes.

Melissa Ellis, head of workflow technology in Europe at Virtu, said: “We designed Triton Valor’s fixed income capabilities to empower traders with pre-trade transparency, operational efficiency, and control in navigating the market. These capabilities enable clients to assess individual and aggregate trade difficulty and find liquidity in a simpler and more cohesive manner–that’s where we see a key added value for a fixed income EMS.

“Our fixed income solution is differentiated by the close integration of Triton Valor’s EMS capabilities with Virtu’s advanced trading analytics–both pre-trade, post-trade, and real-time data handling. Data and analytics are key in electronic trading and especially in fixed income given the fragmented market structure and complexity of OTC data collection.” 

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The move has been made in a bid to fuel Orient Future Singapore’s –

Speaking in an announcement, Orient Futures Singapore asserted that the business had witnessed surging demand for its services across Singapore and the broader region.

Read more – CMC Markets partners with Integral to expand institutional distribution network

Marcus Goi, chief executive of Orient Futures Singapore, said: “Our top priority is to ensure that every of our clients get the best trading experience and a bespoke solution catering to their evolving needs. This includes availing access to a wider range of comprehensive trading platforms like Integral, as well as a plethora of global exchanges. Notably, we are the first brokerage firm in Singapore to provide entry to the Brazilian B3 exchange.

“Our collaboration with Integral empowers our teams to swiftly address client needs and streamline cross-border trading for both international and Chinese clients. By forming this partnership, we position ourselves at the forefront of technological innovation within the financial sector.”

Integral’s fully integrated eFX trading solution applies to every stage of the workflow, allowing clients to streamline, automate and optimise at every stage. 

Sandhu added: “This [partnership] demonstrates Integral’s commitment to supporting brokers, such as Orient Futures Singapore, to better service their fast-growing customer community with our flexible SaaS technology offering […] we are delighted our technology has been chosen by such a prominent and reputable brokerage.”

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Chris Povey, executive director, CME Group:

Stephan von Massenbach, chief revenue officer at DIGITEC: The latest FX triennial survey data showed continued growth of FX swaps, despite this part of the market still being very manual. The overall theme for 2023 will be the continued automation of FX swaps, which will drive electronification and volume growth, with technology playing a key role. One of the main drivers of electronification is the need for banks to more accurately price FX swaps in the volatile interest rate environment and the need to capture and use high quality market data. As FX workflows become more automated, more data than ever before is being analysed in search of better trading and execution. Systems must be capable of managing vast amounts of data at higher levels of intensity. In the past this was usually done using Excel, but increasingly those spreadsheets are being replaced with more robust systems. Another driver is the growth of the cloud, where powerful cloud-based FX applications are more accessible, meaning that an increased number of smaller banks can support more currency pairs and efficiently make more accurate prices. As more firms participate in the FX Swaps and NDF market we expect to see increased trading volumes and an acceleration towards a more electronically traded landscape.

Balraj Bassi, co-founder at Tradefeedr: As FX firms focus on increasing efficiency and demonstrating best execution, data analysis continues to be important for all sizes of trading organisations. Where 2022 saw the majority of buy-side firms use data analytics for transaction cost analysis (TCA), 2023 will see more advanced functionality including, for the first time, the analysis of different trading algos under different market conditions. The FX market continues to be highly fragmented, which used to limit the effectiveness of data analytics, with multiple different data formats coming from a wide variety of venues and liquidity providers. During 2023, we will see more buy-side firms demanding a single, consistent and independent view of their trading data, irrespective of where they trade – a trend that has been growing over the past year. With this better-standardised data, market participants gain new insights and ultimately make better trading decisions.

Vikas Srivastava, chief revenue officer at Integral: The return of meaningful volatility to the FX markets, perhaps for the first time in over a decade, has made it much harder for firms to obtain optimal pricing. Investment managers, particularly those heavily exposed to sterling/dollar (GBP/USD) and euro/dollar (EUR/USD), have had to deal with significantly higher levels of volatility. Those with broad connectivity to liquidity sources and automated workflow have found the recent volatility to be quite manageable. In order for the fund managers to achieve best execution in 2022, they need advance technology that enables them to minimise both the explicit and the implicit costs of trading. With market volatility is unlikely to go away, cloud-based technology provides flexibility and resilience in accessing the right liquidity even in turbulent times, allows for optimal netting and comprehensive execution methods tailored for different currency pairs and trade sizes.

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In addition to providing cloud-based eFX workflow solutions, a range of liquidity providers are brought together through the platform to form a single, integrated network.

Spot FX and indices, treasuries and commodity CFDs will be distributed by CMC Markets, including more than 12,000 CFDs which cover a wide scope of single stocks and ETFs. The platform will allow Integral’s institutional clients to access pricing and execute trades at CMC Markets.

“The partnership with Integral is the latest step in our mission to continue extending our institutional reach,” said Richard Elston, group head of institutional at CMC Markets Connect.

“By leveraging the network of a recognised industry leader, we’re making our pricing and liquidity available to an even wider audience, whilst our single stock CFD offering truly strengthens the wider Integral offering.”

Clients, over the last few years, have viewed CFDs as a flexible tool to gain long or short exposure to single stocks. Because of this, CMC Markets has expanded the scope of instruments it provides within the asset class, including equities on 23 global markets.

“By continuing to include more high-quality liquidity providers in the network, we ensure that our clients are consistently receiving a quality service across all market conditions,” said Harpal Sandhu, chief executive of Integral.

“Our recently launched CFD Prime service is the latest innovation improving the trading experiences of our clients.”

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Ina Patrascu joins as a director in the EMEA sales team, while Julian Elliot has been appointed senior product director for the region.

Patrascu brings extensive knowledge of institutional FX to Integral and will focus on selling the company’s Software-as-a-Service (SaaS) technology to European banks and brokers.

She joins Integral from Edgeware Markets where she served as director. She also previously worked as head of FX sales at INTL FC Stone, for just over nine years.

Meanwhile, Elliot will be based in the UK, acting as product lead on the Integral MarginFX platform, a product built on Integral’s cloud-based technology. The platform enables brokers to deliver FX trading services to a global customer base.

Elliot joins from trading technology provider Gold-i, where he has spent much of his career, serving in various roles including operations manager, operations director and chief commercial officer.

While at Gold-i, Elliot worked across the sales, finance, and operations teams, which provided him with valuable insight into the FX market.

“The key to our successful client engagements has always been our talented people,” said Harpal Sandhu, chief executive of Integral. “Both Julian and Ina continue in that great tradition and will allow Integral to meet the rapidly growing demand for our services.”

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Just 2% of FX firms have said they expect trading on single-dealer platforms to increase in the next year, an industry-wide survey has found.

A report from FX technology provider Integral showed a significant decrease in the percentage of firms who expected to use single dealer platforms in the previous 12 months, dropping to just 2% compared to the previous figure of 18%.

At the same time, the report, which surveyed 94 heads of FX trading and senior FX managers at banks at banks, asset managers and other financial institutions, found that 46% of desks surveyed expect an uptake in the use of multi-dealer platforms in the same period.

FX multi-dealer platforms operated by major institutions such as Refinitiv, Bloomberg and Deutsche Börse’s 360T, provide prices to investors from a variety of investment banks and dealers, while single-dealer platforms deliver pricing from just one bank or dealer.

API trading is also expected to grow, the survey showed, with a third of respondents expecting this method of trading to rise in popularity in the next year due to an increased emphasis on relationship trading. 

Elsewhere, 28% of firms said they expect to operate all FX technology through the cloud in the next five years, while the number of firms using a combination of cloud and on-premise technology is tipped to double to 41%. 

Firms attributed the technology revolution to challenges and uncertainty posed by the pandemic, signalling that the cloud shift would offer better accessibility for distributed workforces.

“This past year has proven that the future of FX trading is highly dependent upon technology. It is no surprise that in the next five years cloud computing is projected to feature in the workflow of almost everyone surveyed,” said Harpal Sandhu, chief executive of Integral. 

Several major institutions have launched cloud focused initiatives in recent months as the demand for cloud technology rises across asset classes. Most recent was BlackRock which confirmed its plans to launch a new cloud-based data solution via its flagship investment operations platform, Aladdin, in February. 

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The new solution, which combines the AxeTrader Quoting and Execution Management System (QEMS) and Integral’s BankFX pricing engine, will provide bond trading clients with real-time streaming of FX prices into their bond trading workflow.

RBI said this would offer bond trading clients better pricing in local currency bonds and reducing request for quote (RFQ) response time.

It will also reduce RBI’s risk as a market-maker by automatically hedging the currency exposure of the bond trade and reduce hedging costs on the back of FX execution.

“Our ability to respond fast to our clients’ requests with highly competitive pricing lies at the core of RBI’s market making philosophy,” said Harald Müller, head of group capital markets trading & institutional sales at RBI.

“Therefore, closing the last technical gap between Fixed Income and FX products to provide combined pricing with maximum efficiency, has been a top priority for us.”

AxeTrading and Integral have undergone several partnerships with participants in the last year as the market looks to enhance its electronic fixed income and FX offering.

In June, US securities and commodities broker INTL FCStone expanded its services to support trading in non-deliverable forwards (NDFs) through a partnership with Integral, while the Indonesia Stock Exchange teamed up with AxeTrading in November to deploy an electronic platform for bond trading on the secondary market.

The partnership by AxeTrading with the Indonesia Stock Exchange followed a series A funding round in July led by the International Finance Corporation (IFC) that saw the firm secure a multi-million investment.

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INTL FCStone has commenced trading NDFs on Integral’s BankFX platform, using the FX technology provider’s streaming NDF workflow and request for stream functionality. The move expands INTL FCStone’s trading and clearing services for a range of OTC FX products.

“The addition of NDFs through INTL brings new levels of efficiency for a global client base seeking enhanced risk management and customization in emerging market currencies. We are pleased to partner with Integral and launch our NDF offering using Integral’s market leading technology,” said Mike Wilkins, head of FX trading at INTL FCStone.

INTL FCStone will initially support NDFs for the Brazilian Real, the Chilean Peso, and the Columbian Peso in Latin America, alongside the Indian Rupee, South Korean Won, the Taiwanese Dollar, and the Indonesian Rupiah, across Asia.

In June last year, INTL FCStone launched its mobile FX trading app for institutional clients which was developed using Integral’s technology. The mobile trading app, known as INTL FCStone OCX Trader, allows clients to access their INTL system remotely to trade and monitor OTC FX positions whenever necessary.

“The launch of INTL FCStone’s NDF offering is an exciting addition to the marketplace,” added Harpal Sandhu, Integral CEO. “With the recent launch of our streaming NDF workflow, in addition to our established RFS functionality, clients can access improved NDF pricing with improved automation, transparency and efficiency in their trading experience.”

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