Best Electronic Trading Venue for Spot FX

Discussion in 'Forex' started by CPTrader, Apr 6, 2013.

  1. Excluding the CME's GLOBEX what is the best electronic trading venue for spot FX where:

    Liquidity is very high,

    Commissions are low,

    Quotes transparent AND real and

    There are no games like "second look" on quotes or re-quotes.

    Venue should also have the ability to connect via a trading API or FIX (preferably a trading API).

    Thank you.
  2. 1245


    What is the size of the account and are you an ECP (Eligible Contract Participant)?

    If you're not, you are likely stuck with wider spreads. ECP tend to get access to better markets and then just pay a small commission per $M, rather than a wider spread then the bank markets.

    To me, what is more important is who your FCM is that is guaranteeing the trades. There is no real protection in these markets. If you use a small broker with a nice platform, but they go broke, you might have nothing.

    Good Luck,

  3. Pippi436


    You can have a look at Lmax exchange. Minimums are not as steep as with EBS and the other big venues. There is no last look, its a straight up central limit order book, with price/time priority order matching.

    The publish their marketdata on their website, so you can judge for yourself if that is what you are looking for.
  4. Thanks pippi for the reference to LMAX. I had not previously heard of them.

    Anyone familiar with Solid FX: ?

    Can people comment on pros/cons of Currenex vs HotspotFX vs Interactive brokers FX?

  5. LMAX seems interesting as it is a pure exchange with client funds segregated. Their website, however, does not publish it appears commission rates or average daily trading volume.
  6. Pippi436


    Its starting at $25/m and going down according to volume-tiers.

    They only publish realtime last trade size on Reuters and their fix datafeed. They have to do that (post-trade transparency rules according to mtf regulation). They are still small, so they dont advertise it on the website. Their CEO said in an interview end of last year their ADV is $4 to 5 billion. This compares to about 30 at Hotspot and around 100 at ebs or cme. So if you want to run a strategy based on liquidity provision, you are probably better of at one of those places. I think its pretty good if you are predominatly a price taker tho. Oh, and their index and cmdty products are crap, there is only a single marketmaker on there. But fx is good, they have like 11 firms quoting on their system.
  7. Thanks again, Pippi

    So for a price taker how would you compare LMAX to Currenex , HotspotFX & Interactive Brokers.

    Are you familiar with Solid FX - I understand they have Rabobank as thier CCP?
  8. Pippi436


    I don't think there is that much of a difference. Its everywhere pretty much the same guys making markets. I chose lmax because i can trade smaller than 250k if i want to, and i like the order matching/firm quotes - as opposed to the last look/indicative quotes at the others. And i got an acceptable commission rate. But i think in 'normal' market conditions its not that different.

    I know Hotspot kicked out 15 of their previously 30 liquidity providers for excessive use of the last look privilege and too high rejection rates late last year. Seems like clients complained too much. So they should perform better now in comparison.
    Currenex is a platform provider and is different depending on your broker. It can be good and it can be utter crap. If you go with that, i would make sure that the FxTrades service is enabled on your specific currenex. That is some sort of cpp service provided by currenex, i dont know all the tech details, but basically it adds a whole lot of liquidity and customer order flow on top of what the relationships of your broker provide. For example Fixi or Lcg have that.

    No idea about SolidFx. They say they do not charge a commission. I would like to know how they make money and if there is a conflict of interest.
  9. I like LMAX, but found it was easier to deal on IBTWS. Nothing bad to say about them.
  10. LMAX is a good choice overall. Though, sadly, they stopped servicing Canadians so I can't trade there myself anymore.

    My only concern with them would be that they aren't yet profitable as a business, and most of their original investors have long since bailed (GS ran for the hills long ago, and they generally know a good investment when they see one.)

    They even had to do a leveraged management buyout so their last major investor (betfair) could reduce ownership without some vulture gaining control and breaking things up. Actually, to be fair I have no idea why they did the MBO, but it was leveraged, and betfair did want to reduce their ownership from a majority/controlling position to something more passive...

    Don't get me wrong, I'm not saying this to put down LMAX; I rather like their model and personally want it to catch on in the spot industry.

    I bring the profitability and investors bailing thing up since they are acting as both the broker (LMAX Exchange) and the MTF/ECN (LMAX MTF.) So as a whole, they need to be in the black or else they'll need to change something drastically, either on the execution side of things or on the broker/client side of things. And I wouldn't want to invest my time and capital into an environment that will either not be around or drastically different in a short time.

    Of course, this matters more if your edge can be found in part within the exchange membership itself (like short term scalping, cross market arb, anything that depends heavily on the execution conditions staying static..) if you're position/swing trading then it doesn't matter so much... but then again if you were swing trading then asking about electronic venues with all the OP's requirements doesn't matter in the first place, so I'm just speaking in context of the thread.


    IB's strength is in the multi-asset class accounts. That's always been my main interest in them.

    They have a decent forex offering but the biggest point of pain is the minimum order size and minimum commission charge making exact risk management kinda hard. Forget trading less than a half lot unless you don't mind your total cost going up drastically. This matters to traders who want to define exact risk down to the dollar/penny on some trades, or long term traders who'll use lower leverage but be holding for longer swings... or heck, forget about basket trading 10+ pairs at once for a net exposure.

    They also rape you on the cost of carry... I remember when the EUR/CHF peg was being defended and a bunch of retailers went long, most brokers I worked with were paying interest on longs even with the thick markups they pad to swap rates, but IB was charging both ways (long and short positions,) and it seemed excessive.


    I also like Dukascopy, who I have first hand experience with using. They've been doing a lot of work lately tightening things up on their ECN. Americans can even access them through a white-label in the US (Alpari and FXDD... both companies I would never recommend for their main services but when you use JForex through them it's all Dukascopy, they just do the intro and take your deposit.)


    And for liquidity taking only (non-participating in the exchange itself, but executing on a raw quote feed from 18+ liquidity sources) there's Pepperstone -- MT4 based, most will bulk at such a suggestion compared to HotSpot or IB, but the quotes you're getting are right from the interbank, liquidity is as good or better than places like LMAX, and it takes a lot less capital to get started (plus, they don't make it painful to trade smaller lot sizes, and treat all order sizes the same.)


    Other than that, I've been looking around for other alternatives..

    Never heard of solid-fx OP brought up.. not really sure what drew you to them either, they don't appear to be offering anything that stands out from the herd.
    #10     Apr 7, 2013