intertrader exchange, yet GFT remains counter-party??

Discussion in 'Forex Brokers' started by marketsurfer, Jun 7, 2007.

  1. can someone explain to me how GFT can remain the counter-party when at the same time they state one can trade directly with others??? This doesn't seem to make sense.... what am i missing??

    Software: DealBook® 360: Inter-Trader Exchange (ITX)

    Ever wondered what it would be like if you could trade directly with another trader* through your forex broker? The ITX feature of DealBook® 360 is a liquid-matching system allowing those conducting online forex trading to transact with each other inside the current, tight bid/offer spreads provided by GFT.

    The ITX system allows traders to trade with each other* with the possibility of obtaining an even tighter spread than may be offered by GFT at a particular moment in time. With ITX, traders can make their own markets for execution with other businesses and individuals conducting online forex trading. However, GFT remains the counterparty on all transactions.

    Not only are you able to transact on up to 20 million on most major currency pairs during GFT hours at 3 to 5 pip spreads, but you get the benefit of placing or hitting a deal possibly at a better price than what GFT is currently quoting.

    A $5 fee is charged to the "initiator" (the trader who places a bid or offer) and the "aggressor" (the trader who hits the bid or offer). If GFT is the aggressor to the initiators' bids or offers, no fees are charged to the trader.

    Let's use the following example:

    GFT is currently pricing the EUR/USD market at 1.2000 bid and 1.2003 offer. This means that GFT is willing to buy from the client at 1.2000 and sell to the client at 1.2003.

    ITX allows the client to place a bid for all other clients at 1.2001 and if another client wants that price they can hit the bid and sell at 1.2001 instead of 1.2000 that GFT was offering. The client who placed the 1.2001 gets to buy at 1.2001 instead of 1.2003.

    Client B "hits" Client A's bid and is short from 1.2001 instead of 1.2000, which is a savings of 1 pip or roughly $10 per $100,000 in volume.

    Client A accepts the offer and is long from 1.2001 instead of 1.2003, which is a savings of 2 pips or roughly $20 per $100,000 in volume.

    Thus, the spread between the bid and the offer is negated and both parties get the better price.

    * Note: GFT remains the counterparty on all transactions.
  2. cstfx


    It appears that this type of trading stays in house and does not interact with any other liquidity providers, such as banks. From what I can interpret, this is not any ECN type trading like HotSpot, IB or EFX. And because you are trading with other GFT clients, I guess that makes GFT the counter party. They may have a good platform for retail trading, but it is still a market maker, and if you want more honest pricing, I would suggest you look for an ECN.
  3. I'm still not following the logic here. obviously gft isn't the counterparty if its an actual ITX as claimed. perhaps someone from gft can advise
  4. I think what GFT means is that they're taking on a similar role in this process as clearing corporations do on futures exchanges.

  5. misha7


    This is normal: whoever holds your funds, executes margin etc should be yr counterparty
    Hotspot is also the counterparty to trades, nothing unusual

    I know some ECNs try to cloud the issue to lure in customers with their "trade directly with..." assurances but this is all marketing