Peer-to-peer FX: How LoopFX aims to be different
Going all out to keep the sell side sweet seems like a sensible strategy for success in the notoriously difficult peer-to-peer FX market.
Since the emergence of the Napster file-sharing app in the late 1990s, providers have sought to apply the peer-to-peer (P2P) concept to a range of services. In foreign exchange, this has spawned a number of venues and platforms, at least one of which suggested that the concept could become so successful that the big banks would become mere conduits for P2P services.
If a match is found, information leakage and execution costs are reduced. If no match is found, best-execution processes are improved
This scenario might not have come to pass, but that hasn’t prevented new entrants hitting the market at irregular intervals with the promise to do things differently. The latest of these is LoopFX, whose founder and chief executive, Blair Hawthorne, has vowed to transform how large trades are executed.
LoopFX’s focus is on large spot trades ($10 million-plus) that are challenging for asset managers and banks.
“Our mission is to provide the means for all large orders to find matches with zero market impact, including orders from banks and by default from the customers of those banks, in a process we call peer-to-peer-to-bank,” says Hawthorne.