FastMatch tweaks fees to discourage use of last look

FastMatch is extending free trading to clients who add liquidity on its central limit order book and are willing to trade with all participants in a bid to discourage last-look trading and draw customers from its rivals.

The move comes as part of the foreign exchange trading platform's annual revision of its charges, with the new schedule set to kick in on February 1.

"We adjust our pricing periodically to make sure FastMatch stays not only superior in transparency and technology, but in costs as well, versus other platforms," says Dmitri Galinov, chief executive of FastMatch.

Free trading is to encourage clients to post their orders on FastMatch instead of EBS and Reuters
Dmitri Galinov, FastMatch

"We would like to encourage no last-look trading on the FastMatch platform. Free trading is to encourage clients to post their orders on FastMatch instead of EBS and Reuters," he adds.

In June 2015, FastMatch updated its policy on last-look liquidity in response to the changes made by three of its competitors to their rules surrounding the contentious practice. Clients were told order-driven liquidity would be given priority over quote-driven (last look) liquidity at the same price.

More changes

Additional fee changes will take effect next month. As outlined in a note to clients, FastMatch will be lowering the threshold for them to take advantage of the $2.50 per million tier while also adding a $2 tier.

Come February 1, clients who trade 5–10% of the platform's average daily volumes (ADV) across all products will achieve the $2.50 rate. Those trading 0–5% will achieve a $3 rate. To snag the benefits of the $2 tier, firms will have to trade 10–15% of ADV. As of November 23, FastMatch was seeing an ADV of $16.8 billion, according to its website.

"The discounts for these tiers are applied on the incremented volume after each tier is achieved," a client note stated.

Currently, clients trading more than $1 billion ADV, the equivalent notional per billing month or 10% of single-counted volume on the platform – whichever is lower – benefit from a $2.50 rate per million.

"We are lowering the tiers to attract more client trading activity on FastMatch versus other venues," Galinov says.

Algos and dark pool

Meanwhile, FastMatch is introducing algorithmic execution to clients at a 0.001% mark-up.

As FX Week reported last month, FastMatch has made its proprietary algorithmic and transaction cost-analysis services available to all subscribers, making it the first institutional ECN to offer algos to all client segments.

FastMatch also plans to introduce MidMatch next month to the tune of $1 per million notional. The new dark pool offering is geared towards creating an environment where clients can safely exchange inventory with one another.

"Unlike [the] FastMatch ECN, MidMatch dark pool matches is price/time priority and has speed bumps of 3 milliseconds on orders to ensure clients who have superior technology do not take advantage of slower clients. MidMatch is open to every subscriber, unlike the competition that opens such products to a subset of clients," Galinov says.