Foreign Exchange Data-driven trading

The Foreign Exchange (FX) market has been shifting towards a fully electronic marketplace which is fast, efficient and low cost. Nearly $6.6 trillion/day of trading (April 2019), it is a high volume / low margin business for banks and liquidity providers alike.

This change to e-trading has tightened spreads and created new opportunities for over 15 years. Driven by technology, an arms race has emerged between Liquidity Providers to out-think and out-perform their rivals. This race is largely unmatched by the Taker-Side who’s low level of technology investment translates into a much lower capacity to interact with the multitute of liquidity pools. This leaves them vulnerable to sudden market moves, flash crashes and gaming by more agile participants.

This whitepaper aims to provide insight into the impact of the on-going technology disruption, and more specifically data and machine learning technologies, which hereafter is referred to as ‘Intelligent Data-Driven Architecture’.

This whitepaper is structured around:

• A brief introduction to FX trading, with a short description of etrading technology for Liquidity Providers and Takers. This section can be ignored by industry specialists.
• A review of the latest market trends, which we still recommend for all readers.
• And finally, a discussion on the potential use of Intelligent Data-Driven Architecture in FX etrading.