Single Dealer vs Multi Dealer: Finding the Best FX Execution Venues

<p>The major FX banks have been pushing their single dealer platforms pretty aggressively of late, looking to capitalise on established relationships with market participants. For example, earlier this year CitiFX announced that it had consolidated its portfolio of eFX trading platforms for corporate and professional investor clients into a new single dealer platform.</p><p>“BNP Paribas has hugely improved the analytics tools available to users of Cortex FX in the last two years, adding a real time holistic view into market liquidity across primary markets, options inventory and restructuring, and options grids and axes,” said Joe Nash, the bank’s Digital COO for Foreign Exchange, Local Markets and Commodities.</p><p>The main driver behind higher electronic activity remains volatility, although this needs to be put in perspective with other market trends such as stagnating customer volumes, higher internalisation ratios and other risk management techniques, as well as a larger share of direct execution between market participants, conditions challenging the growth of volumes on electronic platforms, either single- or multi-dealer.</p><p>That is the view of Guillaume Carreno, the Global Head of Electronic Client Connectivity at <a href="https://www.financemagnates.com/tag/Credit-Agricole/" target="_blank" rel="follow">Crédit Agricole CIB</a>, who observed that the best execution obligation requires buy-side firms to get the best trading outcome for their client, which is often defined as the lowest cost or best price in flow products such as <a href="https://www.financemagnates.com/tag/fx/" target="_blank" rel="follow">FX</a>.</p><p>“From a commercial viewpoint, recent surveys and client feedback indicate that, if anything, activity on multi-dealer platforms is not challenged by the growth of single-dealer platforms but rather by direct <a href="https://www.financemagnates.com/tag/api/" target="_blank" rel="follow">API</a> connectivity, reflecting the greater automation and disintermediation sought by market participants to reduce execution costs,” Carreno said.</p><blockquote><p lang="en" dir="ltr"><a href="https://t.co/pOsVwKjOYu">https://t.co/pOsVwKjOYu</a>