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A foreign exchange platform for performing a foreign exchange transaction between a trading platform and a customer receives currency pair pricing information from a first liquidity provider and also receives the foreign exchange transaction from the customer. The platform then determines whether the foreign exchange transaction can be executed; and responsive to the determination, the foreign exchange transaction is placed on an internal order book. This is performed with the platform acting in an agency role in which the currency pair pricing information is presented unchanged to the customer.
The present application claims priority to U. Provisional Patent Application Ser. This disclosure relates generally to the exchange and trading of currencies, and more particularly, to a trading platform for performing foreign exchange transactions forex or FX and managing forex exposures in other variable asset classes, such as foreign equities. Forex refers to a marketplace for exchanging various foreign currencies.
In general terms, currencies are traded in pairs and exchanged one for the other when traded in the inter-dealer market. That is, forex trading is the simultaneous buying of one currency and selling of another. The rate at which these currencies are exchanged is referred to as the exchange rate and this rate fluctuates continuously depending on the market conditions. Conventional forex trading environments are typically quote driven, paired currency contracts.
Liquidity providers such as banks and larger forex traders provide real-time quotes for the various currency pairs e. These quotes provide information about the exchange rate for buying and selling the currency pair as well as the quantities traded at the given quotes. For example, a liquidity provider, i. Furthermore, a conventional platform is executing the forex trade as a counterparty in terms of the credit risk. One disadvantage of this technique is that customers may not be given the best available prices.
Customers cannot easily evaluate whether the liquidity provider is offering the best available price in the market because the platform is marking up the prices that it receives from typically a single liquidity provider. Also, in the execution of the trades, the trading platform may be taking an adversarial position vis-a-vis the liquidity provider or the Customer while also charging the Customer a set commission at the same time. Additionally, conventional forex trading platforms offer only a quote-style or quote-driven marketplace.
For example, if the conventional forex platform is offering 10 bid at 15 ask, and if a Customer in response offers to sell at 12 for the bid at 10 , the platform will reject the offer because it is dealing at 10 bid and 15 ask only. Even if other conventional platforms may accept orders between the posted quotes i. Continuing with the previous example, if a Customer places an order to sell at 12 , i.
Thus, conventional platforms would not allow non-marketable quote execution. Again, in contrast, this platform would allow a Customer executing trade between the dealer quotes 10 bid and 15 ask if another Customer would be willing to enter into a trade, e. Thus, realizing these inefficiencies, what is needed is a forex trading platform that provides an exchange-style as opposed to order-driven order book that includes composite information about the best available price in the market.
What is further needed is a forex trading platform that provides a broad set of tools for managing complex forex trades and for managing the exposure in post-trade assets as multicurrency cash balances. What is also need is a trading platform that acts as a pure agent by passing on the true quoted prices from liquidity providers without any markups. One aspect of a trading platform relates to a method for performing a foreign exchange transaction between a trading platform and a customer. In accordance with this method currency pair pricing information is received at a trading platform from a first liquidity provider and the foreign exchange transaction from the customer is also received.
In certain aspects of the present disclosure, the trading platform implements one or more of the following features or functionalities individually or in combination:.
The accompanying drawings illustrate several embodiments and, together with the description, serve to explain the principles of the disclosure. The following numbered statements set forth a concise description of the concepts presented herein:. The present disclosure is now described more fully with reference to the accompanying figures, in which several embodiments are shown.
The present disclosure may be embodied in many different forms and should not be construed as limited to the embodiments set forth herein. Rather these embodiments are provided so that this disclosure will be thorough and complete and will fully convey the concepts to those skilled in the art. In certain embodiments of the present disclosure, a computer-implemented foreign exchange trading platform is provided.
The trading platform receives a data stream from one or more liquidity providers. The trading platform aggregates or consolidates the information to present the best available prices a composite price or consolidated price to its customers. Customer orders can be routed to the liquidity providers for execution or executed within the trading platform itself.
This enables customers to perform forex trades with other customers for orders that are non-marketable. The non-marketable customer orders are managed on an internal order book. Another advantage of this arrangement is that the trading platform avoids taking an adversarial position vis-a-vis the liquidity providers or the customers. Another aspect of the trading platform is the post-trade treatment and management of asset exposures. A multicurrency account management system and interface enable customers to perform multicurrency transactions without opening multiple bank accounts around the world.
From the customer's perspective, performing forex trade is seamless because a customer can deposit a single currency in an account and trade a product denominated in another currency. A margin loan may be created which is secured by the customer's deposited base currency. The customer may adjust foreign currency risks or eliminate the margin loan at any time by trading currencies.
Certain aspects of account management, such as margining, which may be implemented in conjunction with embodiments of the present disclosure are described in additional detail in the U.
Patent Application of Thomas P. The illustrated embodiment includes a trading platform , a plurality of Customers , and a plurality of liquidity providers 1 The trading platform establishes connectivity to the plurality of liquidity providers 1 10 using conventional data exchange techniques. In the illustrated embodiment, the liquidity providers are third-party foreign exchange dealers, banks, and exchanges. The liquidity providers e. The data channel includes current real-time quotes for the various currency pairs.
The trading platform receives the real-time quotes and consolidates them into a best of market view that is advantageously presented to the Customer in an exchange-style order book. Further details of the data consolidation are provided below with reference to FIGS. The trading platform also incorporates smart routing logic To further describe how quotes from the plurality of liquidity providers are consolidated, FIG.
Each of the liquidity providers provides a real-time quote to the trading platform for a particular currency pair e. As one skilled in the art will appreciate, the illustrated example includes hypothetical numbers to demonstrate the concepts of the disclosure. Customer 1 wants to sell. Customer 2 wants to buy. Dealer 1 provides a bid of 10 and an ask of Dealer 2 provides a bid of 12 and an ask of Bank I provides a bid of 11 and an ask of The trading platform evaluates each of these quotes and provides a consolidated or composite quote of bid at 12 and ask at 15 which is the lowest available price to buy currency and the highest available price to sell the currency.
In one implementation, the consolidated quote is visually presented for the Customer in an exchange-style order book. The consolidated quote represents the best available prices from the set provided by the liquidity providers, and, unlike other trading platforms is a composite quote from the multiple liquidity providers. As will be appreciated by persons skilled in the art, the plurality of liquidity providers are abstracted from the Customer's point of view.
The Customer receives best of market prices, and the trading platform determines how to route the order for execution. If Customer 2 places an order to buy at 15 , then his order is executed with Dealer 2. If Customer 1 places an order to sell at 12 , then his order is executed with Dealer 1. The embodiment illustrated in FIG. The trading platform arranges the currency transfers on behalf of its Customers Further details on the relationship of the Customer with the trading platform are described below and also shown in FIG.
Non-marketable customer orders are managed on an internal order book. Dealer 1 who is quote driven has bid at 10 and ask at 15 with a spread of 5. Customer 1 wants to sell at 12 , which is greater than Dealer 1 's bid price.
The trading platform internally books this order because it cannot be executed with Dealer 1. Customer 2 , however, does not want to buy at 15 , which is Dealer l's ask price. Because the currency pairs that are internally booked are also included in the composite price information, Customer 2 has visibility of the better deal from Customer 1 in certain implementations, the Customer quote is evident to other customers because it will be for an amount that would be lower than normally offered by a dealer.
The trading platform matches the transactions, and both Customers 1 and 2 get the best price at First, a Customer decides whether he or she will utilize the currency trading or the currency conversion facility on the trading platform. If the Customer chose the trading facility, the Customer will need to designate the base currency , i. For example, if the base currency is selected in US dollars, this means that all trades and all assets purchased or sold on the trading platform will be measured in their present value vis-a-vis US dollars.
In other words, the base currency is an invariant asset class, and all other assets are variant and may fluctuate in value depending on the direction of the market, as with for example stocks or bonds, or the direction of the currency exchange rates, as would be the case with currency trading. After making an initial deposit of liquidity in the designated base currency, the Customer can start trading.
As illustrated in FIG. Returning now to FIG. As explained above, the trading screen where the orders are placed provides the aggregate best quote generated via smart routing mechanism on the trading platform.
In certain embodiments, these aggregate bid and ask quotes are continuously updated and the Customer will have a real-time view of the market and where his or her quote is as compared to the market. Until the posted Customer's quote is accepted and transmitted, the quote can be cancelled and or modified. After the order has been executed, the order cannot be modified and instead will be displayed on the order log screen.
The order may be executed partially or fully In addition to specifying whether it is a buy or a sell order, the Customer will also designate what kind of an order this would be. The trading platform offers a wide slate of various kinds of orders, such as market order, limit order, and other various kinds of combination orders. After the forex trade is executed, the Customer can verify its total position on the universal account page where the Customer's aggregate position in all currencies and in all asset classes is presented.
Thus, the Customer can have a real-time snapshot of his or her liquidity, asset and currency positions at any time.
Moreover, these positions are continuously updated depending on the movement in the market.