These findings are indicative of an FX market that has matured to a point where most customers have access to all the liquidity they need, and historically low levels of volatility have enabled market makers to confidently quote larger sizes at smaller spreads than ever before.
Jean-Philippe Malé, chief executive of BidFX, reckons market participants who use agnostic trading systems are better positioned to navigate this marketplace, providing access to execution tools without sacrificing robust liquidity. “A fully functioning execution management system should provide access to actionable data and robust liquidity in addition to efficient and transparent trading tools, enabling traders to fulfill best execution while managing trade flow, avoiding market manipulation and controlling both information leakage and market impact,” he says. There is limited value in having an execution policy document for FX that conflicts with policies for execution in other asset classes, cautions Andrew Woolmer, managing director New Change FX (NCFX). “Beyond that, the policy needs to take account of real systems and processes – we have seen several best-execution documents that talk about systems that don’t actually exist,” he says.