As banks continue to withdraw risk capital from market-making, we are seeing the continued rise of the non-bank market makers.
Firms that invest hugely in advanced low latency trading technology, that stand ready to commit their own capital to provide tight spreads and deep executable liquidity across FICC markets, from futures to rates and swaps and FX.
So it is perhaps fitting that after more than a decade building the ‘mighty’ Deutsche Bank’s FICC franchise to global dominance, that Zar Amrolia, the ex-Head of FICC is leaving the bank to join XTX Markets as co-CEO. XTX was recently spun out from hedge fund GSA Capital.
Commenting on the hire, Alex Gerko, CEO and former FX quant trader at Deutsche said:
“I am delighted to have Zar join XTX. He is an industry veteran who has added considerable value to the FX and fixed income markets during his career,… additionally we are both keen advocates of utilising technology to benefit the market ecology and increase transparency and efficiency for the end-user.
Non-bank market makers such as XTX and Virtu Financial and others, will in addition to providing liquidity to venues, look to extend their reach, leveraging their own investment in trading technology to provide more complete FX solutions to downstream regional banks.
Those banks, who have traditionally been serviced by the global players such as Deutsche, may well find that non-bank market makers can offer similar if not superior liquidity in some cases, and even license them technology to use within their own eCommerce solution stack – interesting times.