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Vivek Shankar<br />
MARKET COMMENTARY<br />
Improving Execution<br />
Outcomes:<br />
How bright ideas and cutting edge<br />
technology are powering the<br />
evolution of P2P FX<br />
FX market participants have long contended with information leakage impacting trade<br />
outcomes. Peer-to-peer (P2P) trading, originally an antidote to this problem, has evolved<br />
significantly to offer additional benefits to market stakeholders. Vivek Shankar investigates.<br />
P2P service providers list benefits such as<br />
minimizing costs, tracking error reduction,<br />
and boosting strategic trading as benefits<br />
of the model. However, some deficiencies<br />
remain. Detractors point to P2P’s inability<br />
to replicate bank risk warehousing<br />
abilities when markets experience strong<br />
directional moves. For example, LoopFX<br />
has recently launched a dark pool that<br />
follows a peer-to-peer-to-bank model in<br />
response to these events, believing the<br />
traditional P2P model needs an overhaul.<br />
So, how are P2P service providers<br />
addressing these needs, and what form<br />
could P2P shortly take?<br />
GAINS FOR THE BUY-SIDE<br />
“The most important advantage that<br />
the buy-side gains is the opportunity to<br />
minimize market impact by matching<br />
against opposite buy-side interest,” says<br />
James Singleton, Chairman and CEO at<br />
Cürex. “Saving spread by matching at a<br />
midpoint is a nice additional feature but<br />
not the real value driver,” he adds.<br />
P2P’s ability to match buy-side interests<br />
14 MAY 20<strong>23</strong> e-FOREX
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