02.26.2014

FX Traders Get EMS Tools

02.26.2014
Terry Flanagan

Providers of execution management systems are building out their FX capabilities as trading in that asset class continues to incorporate elements from equities trading, such as algorithmic trading and transaction cost analysis.

EMSs are embedding technology that will enable FX traders to connect to global trading venues that are transforming the global FX marketplace, which has a daily turnover of around $5 trillion.

“FX continues to be a huge growth accelerator for us,” said Alfred Eskandar, CEO of Portware. “We will be announcing some innovative alliances in the FX side. Our core clients trade FX internationally. There are some new companies that are changing the landscape of FX market structure. I believe with our client base, we can work with those innovating venues to deliver something to the industry that they haven’t seen before.”

Portware FX offers traders an embedded suite of customizable execution strategies that can help firms increase trading efficiencies, automate workflows and improve execution quality, all while maintaining relationships with their global liquidity providers. In addition, Portware provides integrated access to a wide range of algorithmic strategies from third party providers, including all leading FX dealer banks.

Firms wishing to run their own trading strategies can easily develop, back test and deploy proprietary algorithms directly in Portware FX, in conjunction with Portware’s liquidity aggregation engine for algorithmic order execution.

As it evolves, the large, liquid global FX market continues to present ample growth opportunities for market participants desperately searching for new investment options, according to Aite Group.
“In fact, the landscape has never been so competitive,” Aite said in a report. “New electronic trading platforms have emerged over the last 12 months, directly challenging the positions of incumbent platforms and foretelling a brutal battle. Will emerging FX venues that tout increased transparency, low latency, and cost-effective trading bloody the hands and market shares of established venues?”

Transaction cost analysis, which provides data that explains how trades perform against specific benchmarks, has increasingly become a focal point for alpha-seeking asset managers the world over, including FX, said Aite Group’s Howard Tai.

“Though market participants once saw TCA as a basic compliance monitoring tool, asset managers across asset classes and derivative products nowadays use it to select trading venues and analyze algorithmic strategy,” Tai said in a report. “FX TCA usually means post-trade analysis, but firms are beginning to augment traditional TCA with pre-trade and intraday analysis, enabling traders to aggregate fragmented pools of FX liquidity onto a single venue, achieve better executions, and predict and adjust real-time performance.”

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