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Foreign Exchange

Hotspot FX comes again

For a couple of years after its acquisition by Knight Capital in April 2006, Hotspot dropped off the radar of most FX players, so much so that I have renamed it Tepidspot. So I am a bit surprised to learn that the company is now averaging around $30 billion a day in spot transactions.

The company certainly seems full of confidence again; it says it will publish its monthly volume statistics from now on. Any ECN has to be confident in its prospects to commit to that – just ask EBS and anyone who worked at FXMarketSpace.

According to John Miesner, the company’s global head of sales, and Bill Goodbody, its business manager, Hotspot completely rethought its business model when it was taken over by Knight Capital for what looked like a modest $77.5 million four years ago. The major upshot of this was the ultimate decision to concentrate fully on institutional rather than retail FX. This resulted in Hotspot selling its retail operations to FXCM in January 2009.

Since then, its more focussed approach appears to be paying off. Its average daily volumes in Q4 2009 were a massive 86% higher than Q4 2008, against a backdrop of lower activity in the wider marketplace.

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