Ideally, a bank would like to maintain a personal relationship with each of its liquidity makers the same way that it would with each of its customers. That just makes good business sense.
But with the advent of electronic trading tools, an emerging class of ECNs created impersonal and public access to liquidity based on anonymous “dark pools” with uniformly wider spreads. In the spirit of “if you can’t beat ‘em, join ‘em,” the six or seven larger institutions with single-bank platforms readily contributed to these liquidity pools essentially doing away with the personal relationships they had had with their customers.
The latest liquidity aggregation technology represents a unique opportunity to reestablish FX trading relationships – based on shared history and real calculated risk – to help traders make more money by customizing spreads on an individual basis. And it doesn’t have to be a “cold-turkey” solution, meaning that existing accounts with ECNs can still be maintained.
Further, if such a “relationship pricing” model negated multi-tenant liquidity streams, thus allowing for true 1-to-1 pricing, was based on non-predatory Smart Order Routing, was free for liquidity makers and offered them (and their “relationship-bank” customers) detailed reporting – and was also available in a quickly deployable SaaS format – it would certainly be a win-win solution.