Legacy FX platforms pose a problem for the buyside

June 2023 in Previous Features

A new survey of 50 leaders in FX trading - 57% of which work for firms managing over $100bn of assets - has been commissioned by The Finance Hive team.

Particularly interesting is the fact that despite Finance Hive members being concerned with the effectiveness of their transaction cost analysis and ability to measure market impact in general, it seems that EMS platforms are not the tool they use to address these concerns.

For example, Brendan McMurtray, Market Structure and eFX analyst at T. Rowe Price, says that, “the more immediate issues that are going to have a direct impact on workflow or the platforms immediate function (such as integration and depth of liquidity provided) will always come out on top. TCA and the ability to measure market impact are certainly useful and important, but they are far from critical.” McMurtray believes that there is certainly room for more upstream and downstream integration going forward, but for now it seems that these two functions are being kept separate. T. Rowe Price have a TCA separate from their EMS platform, and McMurtray expects this to be the case at the majority of large buy side firms.

The research report entitled: Measuring European buy side satisfaction and selection criteria for EMS platforms has captured the essence of the current state of the FX platforms industry.

The relentless drive to do more with less, combined with heightened regulatory oversight and changing liquidity provision from banks is now causing every asset manager to re-evaluate platforms that their firms may have been using for over 20 years.

The report shows that the legacy platforms still retain market dominance, probably because it is daunting to change platforms, but it also highlights that their old architecture is unlikely to be able to support the demands of the trading desks of today, let alone support their future aspirations.  Key findings of the report were as follows:

  • Integration with OMS systems is overwhelmingly the biggest priority for the buy side when selecting a platform.
  • Depth of liquidity becomes a greater priority the more time that is spent trading FX over other asset classes.
  • Ability to measure market impact and provision of TCA had the least impact deciding which platform to use.
  • There is an even split among the buy side of those who think one platform can be enough and those that would prefer multiple.
  • The most widely used platforms are easier to integrate and more cost efficient than the rest of the market but fall down when it comes to TCA and their ability to host algos.
  • Automation of trades and workflow is the most common way that platforms improve the way the buy side trade.
  • In the next generation of platforms, the buy side would like to see more front-to-back and multi asset integration, as well as an improved open architecture.

More information about this report can be found at: