Best professional e-FX trading venue: FXSpotStream

The C word is always a difficult one to focus on, as cheaper usually evokes a reduction in quality of service. This is not the case at FXSpotStream (FSS), the multibank distribution utility created in 2012 with the sole purpose of cutting excess fat from the market – an area gaining little attention in the preceding years.

A client describes the platform's customer service as "just amazing", saying its strategy of focusing on cutting costs by offering customers scalability is "awesome".

Flat-fee success

The key to the venue's success is that it offers liquidity providers (LPs) the same flexibility as a direct API to clients, benefitting the 11 banks currently acting as its LPs, and, eventually, the end client as LPs pay a flat fee for participation while price takers do not pay any brokerage at all.

"When we first started the business, people said the model will simply not work," says Alan Schwarz, chief executive of FSS. "Over the course of three years we have proved to the doubters that flat-fee models do work, and that becomes especially clear when looking at how much we spend compared with other platforms out there."

While cost reduction is very much the focus for both dealers and clients, the preservation of quality service and reliability going hand-in-hand with that is paramount, according to Schwarz.

Over the course of three years we have proved to the doubters that flat-fee models do work

Robust and reliable

So far, the platform is receiving the thumbs-up from banks supplying liquidity to clients, with their number increasing recently from six to 11. But, while growing the number of LPs is important, making sure they bring something valuable to the table is even more of a priority.

"When we look at LPs, we are looking at whether they can bring a new client segment or specialist expertise in certain currencies, or something that adds value to all other LPs and clients as well. We have said no to LPs before, and we will continue to keep the ecosystem in mind rather than just concentrating on numbers," Schwarz says.

Banks only... for now

FSS is currently open to bank LPs only, although Schwarz says the decision to exclude non-banks is not necessarily set in stone. As non-bank market-makers increase their presence and impact in the FX markets, the possibility of opening up to them could be a good way to broaden the platform's appeal.

"Currently, only banks are liquidity providers to FSS clients," says Schwarz. "We have been approached by non-banks, but as of this moment we have not decided to expand the LP segment to add non-banks. We are fortunate the business is doing well and serving our client base with the LPs we currently have on the service."