Startup Molten Markets has launched MoltenFX, a new ECN for the foreign exchange markets. The venture is led by Simon Wilson-Taylor, most recently head of FICC eCommerce at UBS, and leverages technology developed by First Derivatives, based on Kx Systems' kdb+ database.
Wilson-Taylor says it is "an ideal time" to launch a new FX ECN, where there is "renewed focus on how FX is executed in the investment management world" and suggests that existing systems are "based on 20 year old technology."
MoltenFX is already running at Equinix's NY4 facility in Secaucus, NJ, and the company is signing up its first liquidity providers. The first six participants - who Wilson-Taylor is not naming but says they also have their trading systems at NY4 - represent more than 60% of global FX liquidity. Also at NY4 or connected into it are rival ECNs in the form of State Street's Currenex, Hotspot FX, ICAP's EBS and Integral's FX Grid.
Wilson-Taylor reckons that major banks have hitherto not been major participants in ECNs because of their broad market focus, being open to the retail market and to corporations. MoltenFX will actually provide two liquidity pools, one for named institutions looking to do FX business to underpin other transactions, perhaps in the securities markets, and another anonymous one that is more speculative in nature.
For its ECN - which will be accessed both electronically via FIX and using a browser-based GUI - Molten Markets turned to First Derivatives, which had already developed its Delta suite (based on technology from its Cognotec acquisition) for use by banks in internalising their own trading. That technology now makes use of Kx's kdb+ database and Q query language, which Wilson-Taylor says is "faster than anything else in the FX marketplace."
Later this year, MoltenFX will be rolled out to Europe from Equinix's data centre in Slough, west of London. Also, in the fourth quarter, the company will introduce InstiFX, a pre-trade analytics and EMS, which will help traders determine best execution for complex trades.
Before his stint at UBS, Wilson-Taylor was at State Street, where he launched the Global Link FX Connect service and oversaw the acquisition of Currenex. He is joined at Molten Markets by fellow FX veterans - between them with stints at State Street and UBS - John Atchue, Francisco Heredia and Alan Moore.