Colin Lambert, Managing Editor, Profit & Loss Magazine, comments on anonymous vs. disclosed models:
“[I]n the absence of other data, FXSS becomes the bellweather for the disclosed, relationship model and last week was eye-opening in that the platform hit a new record above $86 billion, which is not only a serious number, but also suggests to me that volatile conditions lead to those customers not interested in the broker model going to a venue where the LP knows who they are pricing. We should not be surprised because this model brings accountability…
A genuine LP must be more comfortable streaming to a known counterparty within a limited liquidity pool and should be able to demonstrate that the available liquidity is deeper and at a slightly tighter price than elsewhere.
For the consumer, the aforementioned tighter price in larger amounts (and this can be, to a limited degree, in competition) gives them more certainty over their execution when it gets busy – which is what it’s all about, just look at how liquidity still dominates customer thinking.”
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