Let’s face it- we know the FX market is special. I’m here to tell you this is really so!

Last year and the year before, many of us were heads down in the FX Global Code of Conduct. My role was to co-chair the working group that formulated the examples for the Code. More than once, I asked myself: is FX really that different? Do we need a code that is specifically for foreign exchange? The inevitable answer was — yes.

ONE TECHNOLOGY FOR ALL OR ONE FOR EACH?

Although technology providers may operate platforms for both FX and other asset classes, they rarely implement them on the same infrastructure if they aim to be low latency and cope with all the idiosyncrasies of FX.

Previously, when providers tried to implement on the same platform, the consequence was a history replete with platforms that are “almost but not quite there.” Of course this does not preclude a single provider operating two platforms such as NEX Group’s EBS and Brokertec, or Cboe with their equity options and FX platforms or Fastmatch and Euronext. Keeping FX and other asset classes separate under the hood has been shown time and again to be a successful approach.

Greenwich Associates summed this up in a Q4 2015 press release titled “Buy-side traders fail to embrace multi-asset class trading platforms.”

THE EXCEPTION THAT PROVES THE POINT

Perhaps the most successful import from other asset classes has been the FIX protocol. FIX is a strong well-accepted standard, but to gain speed the market uses custom protocols, whether it is EBS Ultra, the Thomson Reuters binary feed or others.

At the root of this issue, we should perhaps just accept that FX is different from other asset classes (equities and and fixed income) in very fundamental ways.

In many ways, the complexities of FX are completely inverted from equities…

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