As more non-bank liquidity providers become active in the FX space, firms need to find ways to differentiate themselves to their counterparties, says Giovanni Pillitteri, portfolio manager at HC Technologies.
“I do think that there will be certain consolidation in some counterparties,” he said in response to a question about increased competition amongst liquidity providers. “If your edge is only based on speed, that’s going to be commoditised, so you need to have the full spectrum of solutions and offer that full spectrum of solutions to counterparties to be able to compete in this environment.”
Pillitteri also emphasised the importance of having a broader, cross-asset approach to trading in order to be a successful FX liquidity provider.
“If you’re just trading foreign exchange, you have a limitation,” he said, before later adding: “I think that it’s very, very important to have a broader reach these days to stay competitive and to understand where the next opportunity is.”
Elsewhere in the interview, Pillitteri discussed how credit constraints continue to limit the liquidity that market participants can access in the market and suggested that as a result, this could be a new area of competition.
“I think that, more than competing on eurodollar, it’s more about competing on growing the access that we can have out there in the market and working alongside the other market participants to make sure that it is an equal opportunity, open field for all of the market participants to access the best liquidity out there,” he said.
The full video interview can be watched here: