Currenex has launched a new trading platform, X2, designed
in response to the changing liquidity profile of the FX market and the evolving
requirements of institutional FX traders.
One important feature of the new platform is that it is
based on HTML5 technology, in contrast to the Java-based multibank front ends that
populate the market today.
Speaking exclusively to Profit
& Loss Rick Schonberg, global head of product for trading and clearing
and the North American head of trading solutions at Currenex, says that
although Java “serves its purpose today and will for many years”, there are
advantages to having an HTML5-based front end.
Firstly, Java is a heavier install both on the desktop
locally and as network settings that might require changes, whereas browsers can
be accessed much more easily. Secondly, where OS X users have struggled to make
Java work for them, any modern browser can access an HTML5-based platform,
rendering the Mac versus PC divide obsolete.
Then, says Schonberg, there is added advantage of having the
flexibility, ease and performance of a browser when using the platform.
Explaining the genesis of the X2 platform, and the decision
to base it on HTML5 technology, he comments: “We didn’t make this investment
simply to jettison the older technology. We did some homework and found that
the world has changed a lot – even if the screens have not – since 2004.”
Diverse liquidity landscape
One of the key changes that Schonberg and his colleagues at
Currenex noted is that the liquidity construct of the FX market has changed
dramatically over the past 12 years. Back in 2004 there were fewer liquidity
providers, there was a lot more simple sweeping of books and most of the liquidity
was provided on a last look basis.
Now Schonberg sees a liquidity landscape that is “not
fragmented, but diverse”, which is why Currenex already offers streaming
anonymous liquidity that can be last look or firm, disclosed liquidity which
can be again be last look or firm and full amount liquidity.
“So we have different modalities that clients will switch in
and out of and the idea was to build a GUI that clients can either switch in
and out of quickly or use as a stand alone platform. The old Java-based GUIs are
good, but I think that they’re mostly tailored to the FX market of ten years
ago,” he says.
Before building the new platform Currenex began tracking
what elements of its Classic platform traders were using the most.
They found that the most used feature on the classic
platform was the fly out ladders, where traders can click to get a vertical fly
out of prices and the pick a precise level to enter their order at. Other
popular workflows included the ability to drop a bid in just ahead of the
current bid, just improving the top of book, and having a big headline price
for certain currencies on screen so that traders can see where the market is at
any given point in time.
“We took all this analysis and distilled it into the trading
GUI in a manner whereby the most popular workflows are only one click away.
What this did was to morph the layout of the platform slightly so that we were
exposing things normally hidden by the fly out button. The idea is to provide a
rich trading environment for the customer where anything that they need is just
one click away,” says Schonberg.
As well as tracking the features that clients were using the
most on the classic platform, Currenex also spent time looking at which
features they were deciding not to use.
One of the challenges in building a modern FX platform is
that clients often simultaneously want more options available to them in a
simpler format. What Currenex has done to try and solve this issue with X2 is
to abandon the menu structure of the previous platform in favour of a more contextualised
approach to using the platform, which relies much more on client-set
“Clients can set a preference when they’re doing an
immediate or cancel [IOC] order-type in the “quick click zone” on top half of
the tile. So then when they’re using that zone it is a default order type that
they have determined all the parameters of, but it is set until they change it.
“Similarly, if they want to customise a specific tile they
can make adjustments to that tile so that it will behave differently and then
the tool icon glows orange so that they can see that a customisation has been
“What we’re trying to do is balance a high degree of
usability versus overloading the clients with menu choices. We’re all creatures
of habit but at the same time we’re all very unique in terms of how we do
things, so what we do is offer the high maintenance work in the preferencing
options and then the trading experience becomes very low maintenance, it’s just
one click,” explains Schonberg.
The new X2 platform has a number of other new features,
including customised visuals designed to help traders process the full range of
available liquidity sources.
“People think of Currenex as a venue – which we are, we do a
lot on FXTrades through our matching engine – but a lot of people use as an
aggregator, sometimes without necessarily applying that label to us,” says
This is why, he adds, the X2 platform tries to help traders
by providing a visual representation of the depth of book available on
Currenex. What this does is give the trader an idea of how deep into the order
book they would have to go to fill a specific order.
Taking into account whether the liquidity available is firm
or last look and typical fill ratios, the platform overlays indicators on top
of the fly out ladder showing where the first place in the order book that the
full amount they want might be available and also providing them with an offer
for the full amount of their trade.
The X2 platform will also offer new order types, which
Currenex says are designed “to empower trader to simultaneously bridge multiple
liquidity sources”. What this means in effect, according to Schonberg, is
providing point and click GUI traders with similar tools to those used by
dealers and non-bank liquidity providers.
The problem identified by Currenex was that, no matter how
fast the market data comes from its server to GUI clients and no matter how
good these clients’ internet and connectivity to the server is, they are never
going to be as fast as the bank and non-bank liquidity providers.
“These institutional traders are shooting at a moving
shadow, not with a laser, but with a bow and arrow,” says Schonberg. “So what
we looked at was how we can make these GUI clickers more successful when
trading. What we did was provide order types, we call them Smart IOCs, that
mimic what the dealers do.”
These new order types start with a typical IOC order which
conducts a sweep at the price determined by the trader, but then if the order
isn’t completely filled what the Smart IOC will do is then show that bid for a
configurable number of milliseconds – typically 200 – to its entire universe of
customers so they can aggress and interact with it.
To avoid information leakage that could move the market
against the client using the Smart IOC, the remaining order will automatically
iceberg to show a $1 million interest in order to blend in with the typical
order size on the platform. This means that anyone looking at the Currenex
market data will see a $1 million order size and if numerous people try to hit
it then the trader using the Smart IOC gets completely filled and the other
market participants get good value, says Schonberg.
“If you think about the definition of “immediate or cancel”
you realise that “immediate” means different things to different people. For
someone using a GUI, where they’re willing to accept internet response times of
200-250 milliseconds to see a price and trade, if we take 100-200 milliseconds
extra to work your interest at your price point and help you increase your fill
ratio, then that’s of tremendous value,” he comments.
Schonberg says that Currenex released these Smart IOC order
types to their API customers over the summer and claims that the increase in
their fill ratios as a result has been significant.
As part of the X2 platform Currenex also claims to be
“Transforming the trade blotter from a transaction record into a visual scorecard
of trade performance”.
“If you think about most trade blotters today, they help
traders confirm that a trade is done or see open orders. But if you’re looking
at your confirmed trades it’s probably because something went wrong and you’re
looking at this end of day because the STP system didn’t reconcile, or some
other type of issue occurred.
“The point is, it’s not really a destination that you go to
with any intellectual curiosity or to extract value. So we asked ourselves:
what can we do in a trade blotter that will actually add value to the end
user?” says Schonberg.
The answer that Currenex came up with for X2 was to pivot
from a trade-driven blotter, where if a trader buys $10 million euros and gets
eight fills then they see eight rows on a blotter, to a more order-centric
model. This means that in the same instance the trader would see that the order
was submitted for $10 million euros, that there were eight fills, which
counterparties were on the other side of the trade and what their VWAP was with
Although Schonberg shies away from describing this as TCA,
he says that it uses TCA-type tools to provide traders with performance
indicators, including mark-out, spread paid and market timing.
“We’re not aspiring to TCA, because we feel that it’s
something that’s still very esoteric and consultative, this is designed to have
more of a market impact or execution reporting feel to it,” he says.
Schonberg argues that X2 will differentiate itself from
other platforms in the market by going further to help and enable traders to
trade more effectively.
“A lot of platforms focus on impactful and attractive user
interfaces, and I think that they’ve largely succeeded in this regard, but what
we’re trying to do is help the trader trade better, to help them navigate and
visual liquidity a bit more and help them customise their orders to trade in a
bespoke style that is more effective for them. Putting all that together, I
think that we’ve come up with a unique and powerful offering, and something
that I haven’t seen on other aggregator competitors or single dealer
platforms,” he says.
The X2 platform was put into live production in the middle
of August but customers will have the choice about of they want to migrate
across to it or use it in conjunction with Currenex’s existing FX platform.
Conceding that launching any new platform is “inherently
risky” Schonberg emphasises that Currenex plans to take a conservative approach
to rolling it out, and will continue to make enhancements to the platform as it
gradually onboards clients.
Looking ahead David Newns, global head of Currenex, also
makes it clear that the firm plans to continue making additions to the
“Over the next 12 months we look forward to introducing
additional functionality to X2 that will closely match the evolving needs of
our diverse and sophisticated client base as well as drive innovation in the
wider FX market,” he says.