Why P2P FX hype could be fading
Some of the early excitement around peer-to-peer (P2P) FX appears to have subsided, with firms suggesting that clients do not care whether trades are matched internally.
If a company has to pay a supplier in China in US dollars, they want access to a cheap and frictionless digital process – whether the currency they buy comes from a peer or not is beside the point.
That is the view of Philippe Gelis, CEO of Kantox, who describes the term P2P as irrelevant.
“It has some resonance for retail business, but we stopped using it some years ago when we discovered that even the largest banks are not able to match more than 25% of their trades, which basically means that a successful P2P model only matches one trade in every four,” he says.
According to Gelis, the real buzz is around differentiated technology such as dynamic hedging solutions that fully automate the corporate FX workflow from exposure and data capture, to hedging policy execution, trading and post-trade analytics.
Others play down the significance of internal matching of trades.
James Hickman, chief commercial officer at FairFX, agrees that the customer’s priorities are making sure they can transact at a fair value, in a timely manner and securely.
“As long as any platform acts as settlement guarantor then risk can be mitigated,” he says.