To the Editor of Profit and Loss Midweek Update:
You mention that the rush of new platforms could be due to “herd instinct whereby nobody wants to be left behind” (And Another Thing, 21 June 2012). More likely, it is for the same reason that London buses come in threes. For both buses and platforms, as time progresses, the challenges and obstacles clear. In the case of buses, traffic eases and later buses have less passengers to board and offload; in the case of platforms, there is greater willingness to deploy capital, the opportunity becomes clearer and technology is more available.
This bunching happens repeatedly: numerous bank platforms launched, FXall arrived, Currenex was reborn and the CME revived all around the same time. That was seven years after Reuters Matching and EBS launched (within a year of each other). More recently we’ve had flurries of prime brokers, electronic trading of emerging markets, NDF and option platforms.
The same skills honed as schoolchildren choosing which of several number 37 buses will reach Clapham Common first still apply today – will the battle-hardened first-mover beat the traffic lights leaving others in the dust or will less-burdened followers overtake? Of course, all analogies have limits since platforms are not all competitive and users can sign up for several, but memories of betting pocket money with friends and scrambling to the top deck of different buses feel distinctly relevant.