There is an interesting article in the November 2009 issue of Euromoney titled ‘Have Reuters and EBS lost control of FX?’ It’s a good read that tries to assess the punch that the two interdealer brokers still carry with respect to overall price discovery in foreign exchange. Euromoney then attempts to answer the question where the market is going to be tomorrow, now that it obviously is no longer with Reuters and EBS. I think this is the wrong question to ask. Read More »
You might have heard already about our most recent initiative, the launch of TrueFX.com. We are very excited about this project! I would like to take the opportunity to highlight some key aspects that that might have gotten lost in the initial media coverage.
What is TrueFX?
TrueFX is Integral providing retail FX brokers with direct market access to the interbank FX market. This is a disruptive move in the tradition of other Silicon Valley companies, using more-advanced technology solutions to fundamentally change a market for the benefit of everyone in it. More on that later.
On TrueFX.com, market participants will find streaming real-time tick-by-tick data of all major currency pairs for free. We are also publishing historical market data, again tick-by-tick at no cost. We believe that this will to some extent change the way foreign exchange markets are organized. I encourage you to register to get full access to everything www.TrueFX.com has to offer.
The disruptive but benevolent nature of TrueFX
While some brokers already have embraced TrueFX, it is a disruptive move and here is why: In today’s retail FX world, brokers often face a conflict of interest because it is so easy for them to trade against their customers and make extra money. For some it proves to be too big of a temptation as too many lawsuits illustrate bear witness.
We are convinced that at the end of the day, most everyone will be better off with TrueFX. On the TrueFX platform, when a customer trades against a broker, that broker immediately and in real time offsets that price directly against the TrueFX price. That TrueFX price is immediately and directly executed against the market, against the aggregated liquidity from major market banks. And since their price is always in competition with other banks, they can’t skew it because another bank might take the deal.
By handing over trade execution to a neutral technology provider, everyone wins. Market making banks who were always hungry for retail flow, love the exposure and easy access TrueFX offers them. Brokers are supportive because instead of working with a larger broker (and a potential competitor), they now get direct market access by working with a neutral third party. Plus, their customers get better prices and service, which enhances their competitive standing.
I call TrueFX a disruptive but benevolent move because it is hard to imagine strong criticism from anyone other than brokers that (ab)use the current system by acting as a market maker and broker in unison. As such, they are not acting as a neutral agent that is providing customers with best execution. The way markets are organized today, there can be a strong conflict of interest because brokers can influence currency rates to their advantage and, if there is no transparency, most customers will never know that they were taken advantage of by unfair business practices. Read More »