| "The banks are certainly paying tens of millions a year [in systems development]. This can be justified by making the platforms multi-asset. The pendulum is moving back towards the banks" Robert Iati, TABB |
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After examining where both buy-side and sell-side dealers are trading, Iati says that this has resulted in the market fragmenting again, after what looked like a period when it would consolidate.
“We’re seeing a shift in the curve. In the late 1990s, there was a move of business away from the banks as the banks supported aggregators such as FXall, Atriax and Currenex. That worked but within a couple of years the banks realized that they wanted stickiness and they started to put money into developing their own [trading] websites. To an extent, that has impacted the growth of the aggregator sites,” says Iati.
He adds: “Around the millennium, everyone was predicting that 50% of the volume would be done on the aggregator platforms.” As Iati points out, that has not happened and now he wonders about the long-term viability of the aggregators.
His views are supported by a senior figure at a major FX player.