The report says that when the Dodd-Frank Act was signed into US
law in 2010, many market participants believed that
single-dealer platforms (SDPs) would lose market share to
multi-dealer platforms (MDPs), such as FXall, FX Connect and
Bloomberg, as more trading gravitated to that model, despite
the fact spot and forward trading did not fall with the
That perception has now changed, says Celent, with the
leading FX banks increasing their investments into SDPs, making
them the primary means for client transactions. Now, the
leading SDPs will compete for ways to better integrate a
client’s FX workflow needs into the
platform’s trading operations, according to the
Still, Celent warns, the market is highly competitive and
has seen substantial growth in recent years beyond the top-tier
banks that were early entrants into the electronic space.
"The growth of SDP volumes is guaranteed, but the success of
individual SDPs is not," says the report.
Specialities in pre-trade enhancements, better post-trade
offerings and client access through multiple channels,
including voice, into the electronic platform hold the key to
the dominance of one SDP over another, according to the Celent
"Unlike the execution-centric approach of the MDPs, the SDP
approach will be more client-centric and involve easy
end-to-end trading," says the report.
In this space, the stats do not lie. According to Bank of
England data cited by Celent, SDPs have overturned rapidly
growing MDP volumes from several years ago to post 54% of all
FX transaction volumes in the UK in 2012.
Comparatively, MDPs contributed 46% of all UK FX volumes so
far this year, says the Celent report.
In 2013, Celent says the share of all UK FX volumes between
SDPs and MDPs will either remain in favour of the single-dealer
venues or shift further in their favour.
vs. MDPs in the fight for FX volume share
| Source: Bank of England revised data;
In September, Deutsche Bank unveiled a new API for its FX trading
platform Autobahn called Rapid after three years of
Rapid is set to substantially increase client trading
volumes, and the bank says it hopes to have between 50 and 100
clients using the facility by year-end.
In January, Citi launched the latest version of its SDP called
Velocity 2.0 offering clients prices that update 92
milliseconds faster than on any other SDP.
Barclay’s is planning to release enhancements
to its Barx platform later this year, sources say.
And UBS is developing a new SDP platform called Neo.
Meanwhile, the MDP space remains dominated by six players
– FXall, Thomson Reuters, FX Connect, Reuters Dealing
3000, Direct and 360T – that provide 90% of the
volumes, says Celent.
However, with the barriers to entry into the FX dealer
platform space falling by 80% during the past seven years,
there is more space than ever for new MDPs in the market, says
the Celent report.
Between May and June, a plethora of new MDPs emerged, including
FxSpotStream, traFXpure, Molten Markets, FastMatch, FTSE Curex,
smartTrade Technologies’ LiquidityFX and
JFX.com’s Jiffix Markets.
With competition in the MDP space tighter than ever, the
Celent report says that a platform launch can only succeed if
it builds volumes quickly – especially in spot FX
However, success will breed envy among the incumbent
platforms, and they will likely begin working soon to gobble up
the competition where possible, says the Celent report.
This means that new MDP entrants must work to specialize
where possible in bespoke services for FX options and other
products, developing expertise that could guarantee their
long-term survivability or attractiveness to potential buyers,
the report concludes.