David Newns, global head of State Street’s Currenex, says the diversity and liquidity provided by ECN (electronic communications networks) trading are keenly important to banks.
Global Finance: How is innovation meeting the needs of your banking clients and the changing nature of the foreign exchange market?
David Newns: There is intense competition among trading platforms for business across all customer segments in FX. Currenex provides FX trading solutions for banks and hedge funds, corporates and institutional and retail FX brokers. This diversity is of great importance when it comes to the depth and breadth of the liquidity pools we manage. Also, the FX marketplace is rapidly evolving in terms of new regulations, increasing demands for transparency and additional scrutiny of the behavior of market participants. All these factors make our ability to innovate of critical importance to our future competitive position as we strive to provide solutions that solve the new challenges our customers face with regards to their FX execution requirements.
GF: What role will ECNs play for banks looking to stay in the FX market?
David Newns: Providers of ECNs, such as Currenex, clearly have to cater to the regulations contained in, for instance, Dodd-Frank and MiFID II, which lay out requirements around the platforms themselves, as well as requirements for the participants on those platforms. We must ensure our customers can continue to manage their FX operations under the new regulatory regimes and provide additional compliance-oriented functionalities to help customers meet their regulatory requirements. The focus of those regulations on transparency, competitive pricing and best execution speaks to our core capabilities, and it is in these areas that ECNs can play a growing part in the FX market.
GF: Why should banks use ECNs?
David Newns: There are a great number of factors a bank considers when deciding to interact with a liquidity pool such as Currenex, and, as an ECN, we need to be able to satisfy each customer’s unique requirements. These include—but are not limited to—depth and breadth of liquidity, functional richness, deterministic performance, how customized the liquidity can be, and so on. To address these requirements, Currenex has created and maintains a rich ecology drawn from a uniquely diverse and sophisticated customer base of banks and hedge funds, corporates and institutional and retail FX brokers. In addition, the Currenex platform supports a broad array of order types and algorithmic execution functions and a variety of execution modes, including request for quote, executable streaming prices and full-amount execution via Currenex BIG [which delivers ladders of streaming currency liquidity for access to specific, large trade sizes in one user interface]. Fundamentally, Currenex allows customers to specify exactly what they require from their liquidity, how and from where they want to access it, and how they want to execute.