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Why Have FastMatch Volumes Spiked?

There have been some raised eyebrows in the FX industry recently amongst those that have noticed FastMatch’s sudden spike in volumes.

Profit & Loss has previously noted FastMatch’s strong start to the year in terms of average daily volumes (ADV), highlighting that in March it reported an ADV of $19.2 billion for the month, a new record high and almost double the $10.1 billion ADV it registered in March 2016.

Then in April it set another high water mark in ADV terms, eclipsing March’s record with ADV of $19.8 billion in April, up 83.3% from April 2016.

FastMatch’s ADV for April was pushed upwards by particularly strong volumes at the end of the month. Specifically, volumes on the ECN jumped from $18.8 billion on April 21, a Friday, to $30.6 billion the following Monday, April 24 – no doubt driven in large part by the results of the first round of the French presidential election.

Its ADV over the course of that week was $29.4 billion. By contrast, the ADV of Hotspot – the only other major ECN that reports its volumes on a daily basis – that week was $34.9 billion. Excluding the May 1 bank holiday, which left markets quiet, Fastmatch’s ADV so far this month is $23.1 billion.

One source speculated that perhaps FastMatch had been able to attract some of the retail flow that had previously been going to FXCM before it was banned from the US, and was having this flow routed to it via a non-bank market maker.

However, although Dmitri Galinov, CEO of FastMatch, tells Profit & Loss that the platform has “onboarded a number of buy side clients” this year, this is not the main driver of these increased volumes.
Instead, he points to the launch of EBS’s Live Ultra data feed, which began offering data at 5 millisecond intervals in February, as the main catalyst for the growth in trading volumes on FastMatch.
“We were always very fast, but before EBS went to five milliseconds the market didn’t care that much because the market was operating in dozens or hundreds of milliseconds. But now that EBS has increased the speed of its data the market is moving faster, speed becomes more important and we are the kings of speed. We see the increase in volumes as a direct benefit of our superior technology,” says Galinov.
Indeed, Galinov predicts that the FX market is going to get even faster still. 
“I don’t see why [FX] won’t get to real-time,” he says. “I think that the other exchanges will go to real-time market data at some point in the future, probably around 2018.”

Galen Stops

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