Technology hands start ups key to $5.1 trillion FX market

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More than five years since global foreign exchange (FX) trading was tainted by a...

LONDON - More than five years since global foreign exchange trading was tainted by a rigging scandal, a handful of banks are more dominant than ever and show no sign of weakening their grip on the $5.1 trillion -a-day electronic market.

The upstarts say banks can read trading patterns to obtain higher prices from asset managers, who should instead save millions of dollars a year, as much as 50% in FX trading costs, by trading directly with each other. Nevertheless, there are now 80 or more venues trading FX, with one or two launching each year, Marketfactory, a firm that offers clients an interface to trade on them, says.

Alternatively, they use multi-dealer platforms such as those from Refinitiv or CME, where banks compete on price. Claude Goulet, CEO of London-based Siege FX, another start-up set to launch in 2019, says his analysis shows the costs associated with market impact for a recent large euro/dollar transaction totalled 2.5 times the cost of the spread paid.

 

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