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FX: Still a Relationship Business

As FXSpotstream (FSS) approaches its sixth anniversary its CEO, Alan Schwarz, argues that a shift towards disclosed trading is one of the biggest industry trends that has emerged during this time.

In particular, he highlights when the Swiss National Bank (SNB) pulled its peg to the euro – which caused massive volatility in the market – as a catalyst for this trend.

“Post-SNB you have Brexit and then you have the US election and there’s been an increase desire –and not only do we hear it but we see it based on the volume growth – for people to know who their counterparty is for credit reasons and market impact has become a very significant piece of the conversation. That’s fundamentally what we’ve seen change,” he says.

However, despite this increased demand for disclosed trading, Schwarz claims that there is still a place for anonymous trading in today’s FX market.

“Anonymous venues will continue to exits, I think anyone who says that they’re over doesn’t really understand the market, but we do see a shift to relationship trading,” says Schwarz.

He notes that this shift might seem counter-intuitive, given that the FX industry has generally moved away from voice trading and the relationship model that was traditionally associated with that, but Schwarz says that market participants are developing “a different kind of relationship” with their counterparties. He adds that knowing who is on the other side of their trade is becoming an increasingly important factor for many FX market participants.

The full interview, in which Schwarz talks about adding new liquidity providers to the FSS platform and expanding into new markets, can be viewed here:

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Galen Stops

Galen Stops