SmartTrade Technologies has released LiquidityFX, a hosted spot FX liquidity aggregation and smart order routing system built on the company’s liquidity management platform.
LiquidityFX provides regional banks with connectors to more than 25 FX exchanges, ECNs and single bank platforms including EBS Ai, Reuters Matching, Currenex, Hotspot FX, FXall, Citi, Goldman Sachs, Nomura and the Royal Bank of Scotland, among others.
The service offers a real-time aggregated view of multiple sources of liquidity, displaying best prices at each size while also accessing full depth of book across all venues. Clients can access the liquidity via an API or through SmartTrade’s trading interface.
The LiquidityFX smart order router monitors all the aggregated prices and manages execution across multiple venues. It prioritises venues with the freshest prices and highest likelihood of execution and breaks large orders into smaller sizes routed across the venues to capture a better average price without exposing the trading strategy. It also works large orders over time to improve prices and reduce market impact.
The LiquidityFX aggregator and smart order router are hosted in Equinix IBX datacentres globally, the same data centres used by some of the major FX ECNs. This allows orders to hit the prices before they move, resulting in fewer rejections or partial fills, while higher execution probability reduces slippage, the company says.
Banks are able to integrate LiquidityFX with risk management systems, pricing engines, and high frequency black box trading algorithms and support their voice traders via SmartTrade trading screens.
“LiquidityFX was created to give regional banks a way to gain access to more liquidity and expand their FX businesses without having to build sophisticated FX aggregation and routing technology in-house,” says Harry Gozlan, CEO of SmartTrade.
“By offering a hosted solution, we can provide our clients with access to SmartTrade’s proven liquidity management components in a simplified and streamlined deployment at a lower total cost of ownership than if they ran the system in-house,” he says.
Peter Atkinson, head of FX product management at SmartTrade tells Squawkbox that the product has wide appeal. “We are very excited to offer regional banks a hosted, rental solution that will lower the cost of entry into the market and allow them to aggregate multiple liquidity sources without the overheads that come with running an IT team or buying an expensive third party product in-house. We are targeting regional banks but the product has also generated a lot of interest with brokers,” he says.
The company says LiquidityFX improves execution quality and also protects relationships with liquidity providers. For instance, if multiple traders are targeting the same price, the smart order router will apply specific reservation logic to prevent ‘machine gunning’ a single bank. In addition, it will prevent sweeping tiered quotes from a single price snapshot.
A feature of LiquidityFX that has proved particular popular, says Atkinson, is the statistical analysis which allows customers to compare execution results from liquidity providers by reviewing fill quality at each venue by currency pair. Users are also able to identify which venues may be last looking their trades and prioritise venues for smart routing based on execution quality.
“The reports can be useful in managing relationships with liquidity providers and proving best execution,” Atkinson says.