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All-to-All Spot FX Trading is a Reality in 2015

By 2 Dec, 2015November 11th, 2019Press Releases

Cognito Europe

  • Inter-dealer spot FX trading venues no longer dominated by pure bank-to-bank trading as prime brokerage relationships facilitate at least 16% of broker-dealer trades
  • At least 75% of spot FX trades on both inter-dealer and multi-dealer platforms are electronically executed, representing 60% of the USD 5.3 trillion notional value of the daily market

LONDON – 2nd December 2015 – A new report from GreySpark Partners, a leading global capital markets consulting firm, shows how all-to-all (A2A) trading has become a reality in the spot FX market over the past year. This significant change in the structure of the spot FX market highlights a trend in which both dealer-to-dealer (D2D) and dealer-to-client (D2C) venues are altering their trading models so that they can offer buyside firms and banks access to many different types of currency liquidity pools.

The report, Trends in FX Trading 2015, explores the implications of these changes to the spot FX market structure for the business models utilised by banks and by buyside firms. For the leading FX banks, the increasingly A2A nature of the market’s structure has resulted in the development of a new type of hybrid trading model that combines the best elements of principal dealing – in which the bank buys up the currencies liquidity needed to service client demand on an ad hoc basis – and agency trading, wherein banks will broker client trades onto either D2D or D2C trading platforms. However, for financial buyside firms and non-financial corporates, spot FX liquidity in an A2A marketplace remains fragmented, and there is an imperative for those companies to now develop the same currencies aggregation tools pioneered by banks several years ago.

As a result of the business model implications for buyside firms and banks linked to the development of an A2A spot FX market, client-to-client spot FX trading on equities-like exchange platforms remains an elusive long-term structural goal. In 2015, there are many varieties of spot FX brokerage platforms claiming to offer trading environments in which financial buyside firms and non-financial corporates can meet each other on the other side of trades without the intermediation of a bank. Crucially though, those brokerage platforms do not offer users mid-price matching of trades against an independent benchmark or the ability to directly exchange and immediately transfer the currencies being traded into bank accounts in the countries where the currencies are needed.

Frederic Ponzo, GreySpark managing partner and lead author of the report, said: “In the future, peer-to-peer currency exchange platforms will grow in sophistication to a point wherein they will become commonplace as FX trading venues. There are already several examples of peer-to-peer currencies brokerage platforms that use an independent mid-rate to match buyer and seller interest, and technology vendors are also developing new software solutions for white-labelled FX trading platforms that are designed to competitively price trades into multi-dealer venues using an independent mid-point.”

Russell Dinnage, GreySpark senior consultant and report co-author, added: “In 2015, the structure of the FX market for spot liquidity is approaching a tipping point. This is emerging because of increasing levels of similarity between the characteristics of dealer-to-dealer spot FX liquidity pools, which are no longer dominated by market-making investment banks, and the characteristics of dealer-to-client trading venues, wherein the sellside now focuses the bulk of its market-making activities. We interpret these facts as the early signs of an emerging all-to-all market for spot FX trading.”

For further information on GreySpark’s research, please e-mail: