Discussing the launch of NEX’s (Nex) new data analytics suite, Tim Cartledge, global head of FX and head of product at NEX Markets, says that it aims to make internalization more beneficial to both liquidity providers and consumers.
“The problem that we’re trying to solve is that the relationship between liquidity provider and consumers on a relationship based platform actually doesn’t have much relationship left in it anymore because the way the market has evolved is that the liquidity consumers really don’t know how how the liquidity providers are making that liquidity, they don’t know how they’re holding the risk for an extended period until they find an offsetting client trade. In short, they don’t understand how internalization works,” says Cartledge.
He explains that liquidity consumers need more information and education about how the internalization process works, while liquidity providers need more information about how their liquidity is being used.
“So what we’re trying to do with data is all about making internalization work. So if internalization works well everyone reaps the benefit. If internalization works well for the liquidity providers they’ll be able to provide better prices for the liquidity consumers, if internalisation works well for the liquidity providers they have less reason to reject so you’re getting more certainty of execution for the liquidity consumers. And both sides benefit from there being less market impact, no one wants to move the market,” says Cartledge.
The full interview can be viewed here: