Peer-to-Peer Competition Grows with Loop FX Launch

The FX industry will have another new trading venue in the peer-to-peer (P2P) space with the launch (in pilot phase) in December of Loop FX, a venue aiming to match off large buy side spot FX trades with bank interest.

Although interest in P2P trading has undoubtedly grown in recent years, sceptics have argued that in its purest form, the model breaks down whenever there is a directional move in markets, because it is then that bank risk warehousing provides value. Loop FX is apparently trying to divert this criticism by including the banks in the process, allowing them to stream axes and other interest above the $10 million threshold the new venue has established.

Matches will execute at an independent market mid-rate, with matches executed with other buy side firms as well as, if no match is available, with banks. The firm says LoopFX has been built upon open architecture and will integrate into current workflows on existing trading platforms, with minimal changes to legal documentation.

LoopFX’s board includes Martin Gilbert, currently chairman of Revolut and the founder of Aberdeen Asset Management, John Sievwright, the former COO, International, of Merrill Lynch, Ivan Ritossa, formerly an executive committee member of Barclays Capital global head of FX at the bank, Mike Soutar who was most recently the CEO of the Evening Standard, and Tim Ewington, an investor and strategist.

The management team is led by four founders. Blair Hawthorne is CEO, an FX trader most recently at Abrdn. Simon Wilson-Taylor is COO, formerly of State Street and UBS, and the CEO and founder of Molten Markets, which was incorporated into EBS. Timothy Johnson, will be chief commercial and held senior roles in American Express, 360T and CME Group, while John Vause, is CTO and is formerly of State Street, Molten Markets and CME Group.

“I’ve been working with Blair and his team since the early days of the LoopFX concept, so it was a natural step to become chairman and a lead investor,” says Sievwright. “The executive team is top class, combining years of trader expertise with a track record of developing and implementing significant digital innovation in finance. Added to that we have a strong board, a diverse investor base, and a dynamic new technological solution which tackles a persistent problem in the foreign exchange market. I believe LoopFX has global potential.”

Ritossa, adds, “It’s obvious that LoopFX will deliver significant benefits to the market as a whole. This is the first time a venue has developed a means of safely allowing market participants to tap the holy grail of the peer-to-peer market in FX, without disenfranchising the sell side. I know LoopFX will go from strength to strength as they move to full launch next year.”

Hawthorne says the firm has the potential to “transform the peer-to-peer market” and reveals that it has spoken to more than 30 financial institutions and gained “significant” expressions of interest. “We believe we have the right solution to the problem of identifying, in real-time, the optimum counterparty when executing large spot FX trades,” he says. “LoopFX improves both execution outcomes and best execution processes, a material improvement for all market participants.”