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FX: Non-bank market makers crowded out

Are non-bank market makers simply repackaging existing liquidity or are they genuinely adding to market flows?


Research published by Greenwich Associates stated that, “contrary to popular opinion”, non-bank liquidity providers were not taking meaningful share from the bulge-bracket banks and that regional banks with local expertise were emerging as useful partners to even the largest asset managers who still need service in those markets. Henry Wilkes, founder of Institutional FX Advisory Partners (IFXAP), is just one of those who suggests that there are too many independent FX platforms and that the market would benefit from consolidation.

“Technology has levelled the playing field by allowing tier-two and three- banks and newcomers to create independent platforms, but they tend to be copycat solutions,” he says.

“In addition, with the use of prime broker relationships and third-party liquidity aggregators, newcomers can create their own customized ECNs [electronic communication networks] or public trading venues. New entrants are using the economic efficiencies of improved technology to aggregate primary liquidity and resell it in their customized solutions to existing bank clients.”


From a liquidity aggregator’s perspective, it would be beneficial to have fewer recyclers and more genuine providers or internalizers.

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