Cloud, multi-dealer platforms, mobile, and APIs to lead FX tech revolution

Rick Steves

Respondents signaled the expected shift to the cloud is driven by lower cost of technology, ease of integration, automation, ability to customize, and accessibility for distributed workforces.

Integral, the Palo Alto-based FX technology company, has published the results of a survey about how the $6 trillion foreign exchange (FX) industry expects to navigate the current tech revolution.

Surveying heads of FX trading and senior FX managers at financial institutions across Europe, North America, and the Asia Pacific, the study found that cloud computing is about to be adopted by nearly the entire industry over the next five years.

Findings showed that 28% of respondents will operate their FX technology completely in the cloud within the next five years compared to the current figure of 2%. An additional 41% will be using some combination of cloud and on-premise technology compared to 24% at present.

Respondents signaled the expected shift to the cloud is driven by lower cost of technology, ease of integration, automation, ability to customize, and accessibility for distributed workforces.

Distribution channels: Multi-dealer platforms and APIs take the lead

The survey found that 46% of participants expect multi-dealer platforms (MDPs) to see the biggest rise in FX trading in the next 12 months, followed closely by APIs at 33%, which are fed by an increased emphasis on relationship trading.

Mobile trading came third with 17%, and single-dealer platforms (SDPs), which once led the ranking, are now last with 2%.

“This interest in API trading underscores a trend toward institutions leveraging increased control over brand and distribution technology while maintaining lower operational costs through outsourced FX technology”, said the announcement.

“This past year has proven that the future of FX trading is highly dependent upon technology. It is no surprise that in the next five years cloud computing is projected to feature in the workflow of almost everyone surveyed”, said Harpal Sandhu, CEO of Integral.

“Looking ahead, we expect that the increased use of cloud will help market participants of all shapes and sizes perform their FX functions on a daily basis cheaper and more efficiently, and that time to market, customization abilities, and remote accessibility will continue to be necessary requirements of a sophisticated workflow.”

The trading industry has invested in single-dealer platforms (SDPs) as they replaced legacy portals. These fully integrated “one-stop-shop” platforms evolved from execution-only trading applications to those featuring sophisticated pre- and post-trade capabilities.

SDPs, however, have encountered difficulties adapting to their clients’ changing demands. Multi-dealer platforms address these challenge as they reduce risks by providing apps that can be developed internally using proprietary technology or externally by peers or other third parties using shared technology. Plug-and-play apps improve the industry’s agility in meeting clients’ changing demands.

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