What’s happening with ECNs?

Last year saw a proliferation of new FX venues with no less than five FX ECNs going live, as well as some important changes to trading protocols of existing ECN venues.

These changes and new venues reflect the heterogeneous nature of the $5.3trn/day global FX market, as venues setup to attract, retain or exclude certain types of market participant, or level the technology playing field and redress the balance between the needs of their core liquidity providers and the requirements of their customers.

Existing FX ECNs have also been feeling the pain over the past year, with both EBS and Reuters Spot matching daily volumes dropping to new multi-year lows in December.

The fall in Reuters and EBS volumes is in part due to large tier 1 ‘flow monster’ banks internalising upwards of 80+% of their flows (in effect running their own internal ECN), thus reducing the amount of FX flows that ‘leaks out’ to the external market.

Also, we had seen major liquidity providers shift away from ECNs that have placed too great an emphasis on algorithmic trading access at the expense of traditional manual execution.

This was one of the factors that hit EBS volumes over the past few years, as shown in the graph below from the BIS triennial FX survey data. Where manual trading in EBS has dropped from nearly 70% of volumes in 2007 to closer to 30% in 2013, whilst algorithmic execution has risen from 30% to 70% in that same period.

EBS Volumes Manual vs Algo

EBS data from Bank of International Settlements (BIS) 2013 Triennial FX survey

However, despite the overall size of the FX market, these new venues (not to mention the incumbents) have to move fast in order t0 attract, retain and grow their volumes.


Feature of platform

Tech provider



Tier 1 Liquidity (zero execution cost)

Tullett Prebon /Integral



FX utility platform

Bank consortium /SmartTrade


(zero execution cost)


Standard ECN




Segments: HFT & Transactional  models



/First Derivatives


Fair Market

Tradition /Trad-X Swaps


(random matching pause introduced)

New FX ECNs that launched last year

The need to deliver fast, and to quickly support new product releases and change in trading protocols are some of the reasons why FastMatch who are co-owned by FXCM, BNY and use Credit Suisse’s Pathfinder matching technology, announced today that they had selected Caplin’s FX Motif as the starting point to develop their new electronic distribution platform for its spot FX matching service.

Dmitri Galinov, CEO of FastMatch, says: “Our platform is based on the technology underpinning the world’s largest equities crossing system. So when it came to the front end we needed to implement an equally impressive solution. When we looked into it, there was only one vendor we trusted to deliver to our standards within the time and budget constraint.”

Richard Leader, Caplin’s Executive Vice President, Americas, says: “The win is significant because it marks Caplin’s entry into a new arena: front-ends for non-bank trading platforms – a compelling segment, given the regulatory push in this direction and the proliferation of firms offering these services, especially in the U.S.”

More here

One Response

  1. […] On EBS Markets, volumes in major G7 pairs remained depressed, whilst there was record activity levels in Emerging Markets and NDF pairs in January. See here previous coverage on FX ECNs. […]

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