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Venue fragmentation set to continue, says FX veteran

MarketFactory chairman James Sinclair sets out the reasons why FX liquidity could fragment further, in a new white paper.


Fragmentation of foreign-exchange liquidity has increased during the past five years and is set to persist as platform innovation continues and the market structure favours a growing number of trading venues, according to a new industry white paper.

James Sinclair 2-160x186
James Sinclair,

Author James Sinclair, executive chairman and co-founder of FX trading technology provider MarketFactory, believes the proliferation of venues has been inevitable since the launch of ParFX, a bank-backed currencies platform hosted by interdealer broker Tradition that began trading in 2013. The launch of ParFX coincided with a number of other new initiatives, each with a unique strategy to attract and maintain liquidity.

Though some platforms have been more successful than others, FX trading is no longer restricted to a small selection of venues. MarketFactory itself now connects to more than 75 venues, whereas in 2012 it was less than 20, according to Sinclair.

“The FX market seems to have moved from what was once a utilitarian model – the greatest good to the greatest number – to a model where we have a duty to every individual client,” he says.

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