By Joel Clark
New York-based currency hedge fund switched from Thomson Reuters to MarketFactory last month as it seeks to rationalise and simplify the process of aggregating liquidity.

New York-based currency hedge fund FX Concepts has moved its automated market data and execution activity to an aggregation platform developed by FX technology vendor MarketFactory.

FX Concepts transacts up to 3,000 orders a day in foreign exchange, and had previously used Thomson Reuters Dealing Aggregator, based on the AthenaFX platform. After conducting a proof-of-concept with a number of vendors in 2012, the fund began using MarketFactory’s technology exclusively in mid-January.

The switch to MarketFactory came about in part because FX Concepts had not been making full use of the functionality provided by the previous system and wanted to simplify and rationalise the aggregation process. MarketFactory’s FX aggregator provides a single application programming interface (API) to connect the firm to multiple banks and electronic communication networks (ECNs).

“The main goal was to find something that had a much easier and more stable API – the one we had previously was a fully fledged package with a lot of bells and whistles we didn’t use. The new API is simple, light-weight and very well documented. Going with MarketFactory has drastically reduced the amount of time we spend on infrastructure and operational issues, allowing us to focus on our core models and trading logic,” says Morten Hoyer, vice-president of investment research at FX Concepts in New York.

The recent proliferation of trading platforms in the FX market, and the potential fragmentation of liquidity that results, has given rise to an increased need for efficient aggregation platforms on the buy side, adds James Sinclair, chief executive of MarketFactory in New York.

“We worked closely with FX Concepts to understand their precise requirements and to deliver a solution that dovetails with their FX strategy and tactical delivery. The broader market trends support this – there are now far more places to lay off risk and execute trades than there were a year ago. Including banks, there are probably around 50 viable platforms today,” says Sinclair.

“As an asset manager, our key goal is to make returns for clients, so the fragmentation is an inconvenience,” adds Hoyer. “That’s why we have leant on a vendor like MarketFactory, because they can do the aggregation based on our choosing and make it like one big synthetic pot for us.”

Source: FX Week