This report looks at the FX market, with an eye toward where the spot FX market is going. It briefly assesses the current FX market ecosystem including trends, market structure, and technology (aggregation, algos, and electronic trading) in light of global regulation, merging liquidity, and the changing competitive dynamics.

The cycle of change in foreign exchange, already rapid, accelerated in 2015. The ecosystem incorporates a variety of vendors across the spectrum: data, analytics, TCA, tools (connectivity, aggregation), nonbank liquidity providers, FX electronic venues, and the processing space.

The scandals of the past years, combined with major FX price dislocations, have driven wholesale change. All of this is happening amid regulatory forces surrounding spot FX, as well as tepid volume trends.

“The FX ecosystem is becoming more complex, with firms attempting to create better means of assessing FX trading opportunities via access to dealer, nontraditional dealer, and platform liquidity,“ says Brad Bailey, a research director with Celent’s Securities and Investments practice. “Many of the solutions sets for accessing the FX market are now available from single firms, which have become the new global megaplatforms. Concurrently, FinTech disruption and blockchain are becoming part of the FX conversation.”