(Reuters) – ParFX, a currency trading platform launched to curb the advantage of high-frequency traders, will allow hedge funds to join banks in its trade to increase liquidity and create a wider trading community.
The platform, featuring technology to level the playing field between slower and faster clients, has been exclusive to banks with 12, including Deutsche Bank and Barclays, backing it since its launch last April.
“In the coming months, we will allow customers to trade through their prime broker alongside the banks,” said Roger Rutherford, chief operating officer at ParFX.
The latest BIS triennial survey of the currency market shows hedge funds and proprietary trading firms have a 11 percent share of the $5-trillion-a-day global currency market. The spot currency market sees a daily turnover of $2 trillion a day.
The main clients for prime brokerages, which are usually owned by banks themselves, are hedge funds. Hedge funds often run machine-driven algorithmic trading programmes, or algos, that pump out a large number of small orders at a super-fast pace.