“Trading solutions” is the Future

FX market undoubtedly is one of the most major, if not the largest, markets in the world. According to CLS Bank, which offers the world’s largest multilateral cash settlement service, daily volume in January 2016 was $4.8 trillion, down 9 percent from a year earlier and a far cry from the near $6 trillion peak in late 2014. But FX the market is also a red ocean market where banks and brokers battle for a share of the market in a stage that is fiercely competitive. It has been described as a “Bloody Red Ocean” of sharks because service providers continue to strategize within a defined economic structure that is dictated by existing demand. In this market, the numbers of players are enormous which makes it very difficult for the end user to decide which one to choose.

In my opinion in this crowded market where everyone is offering commodity type products and services the future is bright for the companies that are providing solutions to the market-place.

As I interpret from the US and European Fixed Income industry benchmarking surveys 2015 there are three main challenges that fixed income trading desks are facing. The survey’s respondents were from senior buy-side fixed income professionals made up primarily of Heads of Fixed Income Trading, CEO’s and senior management of leading asset managers and hedge funds.

1. Liquidity: 
 In 2015, 50% of US respondents state their biggest challenge is sourcing liquidity when asked what are the top three challenges you are currently facing in your primary trading medium? Interestingly 73% of European respondents felt that way as well.

2. Executions measurement: 28% of European and 16% of US respondents found “Measuring Best Execution” as one of the biggest challenges their trading desks are facing.

3. Cost Effectiveness:
18% of respondents chose “Cost Effectiveness” as the most important factor when choosing a broker.
To solve traders’ problem and challenges, having a trader’s mind-set and background will provide a huge help. Tradeview Markets has taken a different path in the industry by hiring sales consultants with a strong trading back-ground. This approach has enabled US (Trading consultants) to think like a trader and understand the needs and “unmet” needs of other traders in one of the largest markets in the world.
Tradeview Markets, as one of the pioneer trading houses in the industry answers the above mentioned challenges through the following solutions:

Innovative Liquidity Connector®.
This innovative solution sources liquidity from clients, banks and non-bank liquidity providers. Liquidity is tailored to individual trader requirements. This solution connects the trader to the pool of liquidity provided by banks, brokers and other traders. Trades are priced with multiple counter parties and then executed at the best price. In sourcing prices, the desk is able to aggregate normal market spreads narrower, especially when pricing emerging market trades. The FX desk also uses numerous trading platforms to source the best prices available on the market. In addition to source the liquidity Innovative liquidity connector helps providing consistent tights spreads to the traders by engaging liquidity providers to provide the best prices to fight for liquidity.

Innovative liquidity connector® is a solution for high trading costs. By narrowing the spreads between bid and offer, the trading cost of a trade reduces significantly. In addition, Tradeview Markets provides the best prices to its traders. By reducing the commission costs Tradeview Markets is able to provide a very competitive commission structure to the traders in the market.

Low Latency and VPS Solutions
Before we go further, let’s see what VPS and latency are and why they are important for traders. Virtual Private Server (VPS) is a dedicated piece of a server in a high-performance data center. It is designed and made to never fail, in order to allow automated traders some comfort that their Trading platform will always be live, accepting orders and executing trades in competitive time.
The VPS runs on a high-end server with multiple network feed. It has no single point of hardware failure so will be more reliable and secure for fixed income market.

Latency on the other hand, is the measure of time that takes for a “message” to go from VPS to broker/liquidity provider. The measurement is usually in milliseconds. Imagine that you are trying to place an order or a trade during a Non-Farm Payroll data. They are tens of thousands of traders attempting to place orders or trades at the same time. There is a finite amount of liquidity available to grab at the guaranteed price before slippage occurs. The lower the latency, the greater the likelihood that order gets filled first.

According to my findings the industry average of latency tests from forex VPS to trading servers are about 8.29 milliseconds. Tradeview provides ultra-fast execution because their latency tests from VPS to trading servers is 1.5 milliseconds. This provides our traders with the best execution measurement.
In conclusion, the future of trading in my opinion is in the hands of dealers who understand the traders’ mind-set, recognize their needs and unmet needs, know their problems, and try to provide solutions that fit those challenges. Since the trading market is becoming highly competitive, in order to gain a stronger market share we need new solution providers with trading backgrounds that can keep up with today’s technology and fast changes.

Kazem Ghouchani

 

Kazem Ghouchani
Tradeview Director- Middle East and North Africa
kghouchani@tvmarkets.com