Peter Atkinson: Anonymity, Transparency, and the Personal Touch

This is a guest post by Peter Atkinson, Fx Product Manager at FxPro. Peter is a specialist in FX eCommerce. His experience has been gained in the investment banks, delivering low latency pricing, market making, trading and risk management capabilities.  He has a strong background in both business and technology, working with development teams across geographic location (30+). His core strength is focused towards business delivery with a pragmatic approach to enterprise architecture. Peter-Atkinson-head-black

He has a cross-asset front-to-back experience in capital markets in both volume flow (FX, Equities & Rates) as well as complex products (IRDs & EQDs). A particular focus is given on eFX low-latency pricing, risk management, high-frequency trading and timeseries-data.

His primary goal is to solve complex business challenges through technology innovation, management and delivery.


The FX spot market these days appears to be divided in pursuing a common cause – best execution. One side says that the buyside needs complete anonymity in order to maximize quality. The other side says best execution is only possible through the liquidity arising from full participation. This anonymity versus transparency argument was a major theme of the recent FX Week USA conference in New York.

The anonymity assumption comes in large part from the equities markets where it has proven very valuable. But in the FX markets, as in most OTC traded instruments, anonymity is not always the best way to get the best prices. Relationships have always been crucial in trading FX, as they are in many things.

For example, my local independent green grocer always greets me personally and keeps filling my shopping bags with free vegetables. Yesterday it was two large organic portabella mushrooms, and the week before it was a handful of vine ripened tomatoes. As a result I now do all my vegetable shopping with him in preference to the anonymous local supermarket. The relationship strategy works well for my green grocer.

Of course FX market making is not vegetable shopping, but it is highly reliant upon the relationship between the dealer and the customer. An FX price is based on the risk and the credit associated with each customer; the customer’s trading style, and his credit-worthiness. So if buy-side customers really want price improvement, their relationships with the dealing banks are key.

Several of the speakers at the FX Week conference pointed out that single dealer platforms can often deliver better price improvement to clients than ECNs, if the customers are open with them. Liquidity providers need to control risk. If they’re worried that a particular customer will sweep the bottom of the book and wipe out their profitability for the day, they’re less likely to offer that customer prices that increase their risk. If customers work with them to establish and follow some rules of engagement, the dealers will often be able to provide improved pricing.

Panellists at the conference pointed out where transparency can build trust and improve results for both sides:

  1. Understanding the rules of execution
  2. Understanding the customer’s objectives
  3. Understanding how both sides control risk

In other words, if the dealers and customers understand each other the buying (or selling) experience becomes more personal. And the dealer can “sweeten” the transaction with the equivalent of a few extra tomatoes in the customer’s shopping bag. In this day and age of anonymous high frequency trading venues and impersonal-out-of-town-supermarkets, it is wise and potentially profitable to cultivate direct relationships.

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