Client-centric FX trading: transparency, liquidity and support
Alan Schwarz, CEO FXSpotStream, tells FX-MM editor Peter Garnham how an original approach and an increased demand for transparency is driving growth at the world’s premier disclosed FX trading venue…
The continued rise in volumes across FXSpotStream’s trading service is partly the result of its unique business model, according to Schwarz.
“We have become the leading service when it comes to disclosed liquidity, and it really is the result of our model,” he says.
FXSpotStream charges price-taking clients nothing to trade on its service, whether that is in terms of commissions, hosting or data fees, he explains. Furthermore, Schwarz says, FXSpotStream remains the only trading service offering disclosed FX and precious metals trading that does not charge a per transaction fee to its bank liquidity providers.
“Our banks pay a quarterly fee that is unrelated to volume. That means the more volume they transact with us, the less their effective rate per trade is, and ultimately that translates into better pricing for the end client,” he says.
“So we remain fundamentally very different to any other service out there that supports disclosed FX and precious metals trading.”
Supporting the client
In addition, Schwarz adds, FXSpotStream offers an extremely stable trading environment, and prides itself on the level of support it provides its clients and liquidity providers.
“One of the things we are known for is a very high level of support,” he says.
“Often, as companies grow and become more successful and entrenched, one of the things that starts to degrade is the support they offer. Those companies that tend to do well, in any business, are known for their excellent levels of support where the client always comes first.”
At the same time, rising volumes can also be attributed to the addition of new products, according to Schwarz. Five-and-a-half years ago, FXSpotStream started out with a spot FX API. Now it has a GUI, offers spot precious metals, forwards and swaps, and in January this year rolled out non-deliverable forwards and non-deliverable swaps. FXSpotStream has also added several order types – most recently, limit orders – on to its system.
Furthermore, FXSpotStream has added liquidity providers on to its trading service. Having launched with six bank liquidity providers in 2011, it now has 12 on its service and plans to add a thirteenth in the near future.
That is not to say that Schwarz believes in adding liquidity providers to the service for their own sake.
“We will continue to add liquidity providers that we believe our clients want. We are not like other services that think they need 25 liquidity providers,” he says.
“We don’t believe our clients want 25 liquidity providers. We believe they want the right liquidity providers, the right liquidity, the right experience, the right relationship and they want an environment that is stable and allows them to transact when they need to.”