Global foreign exchange trading, already the largest financial market in the world by trading volume, is on the rise. The New York Fed reported average daily FX volume of $1.19 trillion in October 2024, up 17 percent from the year-earlier period, and new tariffs imposed by the US are stoking volatility and providing a tailwind for trading activity.
Amid volume growth, the structure of the FX market continues to evolve, driven by factors such as a sharp increase in the number and types of trading venues, and more algorithmic execution.
Traders Magazine caught up with Tomo Tokuyama, head of Trading Technologies’ nearly two-year-old TT FX business unit, to learn more about the state of FX trading and how TT is expanding its capabilities in the market.
Briefly discuss your career to date?
Prior to joining Trading Technologies, I spent more than a decade at First Quadrant, which is a large quant macro manager based in California. I was first head of FX trading and then I was the head of the entire trading group. Prior to First Quadrant I was at Goldman Sachs in Hong Kong and in Tokyo, in FX.
I joined TT to lead TT’s expansion into FX in July 2023. Keith Todd, the CEO and I had a mutual connection, and the relationship spawned from there when he was thinking about going into separate, multi asset classes, FX being one of them. So it all came together.
How is the FX market evolving?
I’ve been speaking at industry events for years now, and one of my main themes has been how the future will be electronified. Whether it’s algorithmic trading, whether it’s AI, or whether it’s machine learning, what has been rules-based is going to be more automated and driven by data and analytics.
But the market is not necessarily ready to get there quite yet. There are many reasons for that – A couple being lack of technology/innovation and willingness to change. In order for adoption to take place, the right technology needs to exist along with firms and traders who are willing and open to transforming their execution workflows – even if that means a trader’s role will significantly change. I’ve been around long enough to have seen the progression on the sell side – when e-trading in FX started, people were reluctant to move at first and they held on to voice trading for a while. But that changed over time as technology advanced, and buy-side firms adopted to electronfication. It’s inevitable and simply a matter of time before the role of the trader becomes similar to a pilot in the cockpit monitoring all of their automated executions across various asset classes on a single platform. I along with the team have to do our best to make sure that platform will be TT.
The historical strength of Trading Technologies has been in futures and options. How are you muscling into the FX market?
TT has a great advantage in terms of distribution. We have connectivity on the sell side and on the buy side that we have built over the last 30 plus years. And it’s a sticky distribution as new offerings are heavily scrutinized at most firms – they have to go through an arduous process to obtain approval. So the play for TT in FX is to target existing TT clients with FX as a value-add, as an opportunity for them to consolidate. If you go to any hedge fund today, they use a variety of different platforms across various asset classes. Hopefully, they’re using TT for futures, but for FX, they might be using multiple platforms. But we know they’re looking for consolidation in order to streamline their process through the life cycle of the trade, from execution all the way downstream
So we get a lot of traction from buy-side clients that want to consolidate their EMSs, which allows them to save on screen real estate, streamlines their post-trade workflow with a single drop copy for futures and options and FX, gives them a single FIX API for both futures and options as well as FX – the whole gamut. There’s the counter argument that by using one platform, your risk is consolidated to one platform. That is a legitimate argument, but as firms get better at managing that, net-net it makes sense for buy side firms to consolidate.
What we’re building at TT for FX is not just another FX offering. We’ll give you everything that you have from your existing FX platform, but also we open up your world to all of our futures trading tools. You can trade separate asset classes on one platform, using the same tools whether it be Autospreader to trade basis or ADL to create bespoke algos across asset classes. That’s the vision.
Our story is resonating – liquidity providers are coming to us to launch new OTC products on our platform. It’s all part of our value proposition of being a massive distribution hub. And we’re a technology provider, not a venue, so we’re not in conflict or competition with the LPs – we want to be partners and create an ecosystem that is mutually beneficial for all participants.
Is FX still in the early stages of realizing its longer-term vision at TT?
I’d say so. The idea has always been to bring ECN/venue liquidity onto the TT ecosystem. The first iteration was to get anonymous streaming liquidity. Now the push is for our full FX offering, which will include full amount liquidity with multiple LPs, forwards, swaps and NDFs. That’s coming soon, so keep an eye on us.
