Foreign Exchange Markets

Foreign currency market continues to remain non-centralized and fragmented. While the collective daily volume in spot, forward and swap foreign exchange market is around 3 trillion, lack of transparent price discovery and liquidity amongst numerous institutional Forex dealing platforms still remains a prime concern due to the fragmented nature of Forex market. Given the increasing interest in online foreign exchange dealings, new and improved trading venues are becoming available. Foreign exchange is now being treated as an asset class by investors, thus further increasing the depth of the market and driving trading volumes higher. However, traders still find it difficult to get a complete and true picture of liquidity in forex market. They are therefore left competing for order flow with decreasing ability to offset trades efficiently.


Due to the decentralized, segmented and over-the-counter nature of Forex market, liquidity has always been dispersed. However, in the last ten years the number of sources from where liquidity can be sourced has increased enormously. Forex Liquidity Aggregators are tools that enable market participants to view all of the various sources of liquidity on one screen. Last few years have seen a drastic increase in a number of solutions being developed and applied by numerous buy-side firms.Given the segmented and over-the counter nature of Forex market, the need for fast and easy way to access multiple sources of liquidity for establishing the right price and market depth cannot be underestimated.


Liquidity Aggregation tools that enable forex traders to view all of the various sources of liquidity on one screen are now considered to be a vital trading tool especially for buy-side traders. Forex Aggregators act as a centralized trading portal for accepting and normalizing data from various liquidity sources, feeding this information into algorithmic engines, receiving orders and routing them out into the marketplace. This enables traders to have access to all available liquidity in a single trading platform, thus enabling them to sort, analyze and achieve trading efficiency. However, Aggregation is still relatively a new concept and the focus is not on the quality of this technology but on the way it is applied.