At the recent Forex Canada event, I found myself sitting on a panel with Phil Harris, CEO of 360T America. The panel was at the Caplin-sponsored breakfast event, and the subject was the balance between single-dealer and multi-dealer platforms as channels to market.
Given that 360T is a prominent multi-dealer platform, and that a large part of Caplin’s business involves providing banks with the tools build advanced single-dealer platforms, I anticipated that Phil and I might find ourselves disagreeing about many aspects of banks’ FX channel strategy. But the surprising thing was how much we agreed about, and what similar conclusions we had reached about current practice and likely future trends.
We both felt that there was now a fairly stable equilibrium between the use of single and multi-dealer routes to market, and that no serious player in the FX market could afford to ignore either. We discussed the Bank of England numbers on the relative usage of SDPs vs MDPs by different categories of users, and the recent Aité report on the growth in SDPs.
And we both seemed to have independently concluded that the analogy of Expedia versus airline websites was a great metaphor for what is going on in online trading: many travellers use Expedia to compare prices, but airlines continue to do everything they can (with considerable success) to make it attractive to visit their own websites and do the actual booking from there.
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