London-based Fixnetix, a provider of co-location and proximity hosting centres, has formed a strategic alliance with foreign exchange software company MarketFactory to provide instant global trading connectivity to algorithmic traders in the futures and equities space.

By joining forces with MarketFactory, Fixnetix is now able to provide FX trading gateway software to its global trading customer base of investment banks, hedge funds and prop desks.

The companies say the partnership seeks to expand the FX spot market, which has alpha opportunities for all asset class high frequency traders, they add.

According to James Sinclair, CEO, MarketFactory, there is a much higher purpose to this initiative. “There are over 3000 algorithmic traders in other asset classes who have yet to explore the institutional currency markets. We’ve contributed our deep understanding of the many microstructures into a transparent package of software and services that will allow instant access to these markets for both buy side and sell side participants. The goal is to really increase counterparty diversity and therefore liquidity.”

MarketFactory is a software engineering company set up by Sinclair and two former EBS colleagues – Ed Howorka, CTO of MarketFactory, and Darren Jer, head of sales and COO (Profit & Loss, July 2008). The company’s algorithmic trading platform helps to improve customer strategies by providing “lossless” market data and order submission for the interdealer foreign exchange market. Through an API, client models and e-commerce applications gain instant connectivity to all major FX ECNs and dealing venues.

Foreign exchange traders using the Fixnetix-MarketFactory offering will be able to scale their trading models globally to be closest to all the major currency liquidity pools in London, New York and Chicago in an attempt to reduce distance latencies which are a huge component of round trip time in FX trading although not equities. A Tokyo rollout is scheduled for year-end, the companies say.

Source: Profit and Loss