Opportunity no longer knocks

So it's ironic that a platform that touts central counterparty clearing - which eliminates counterparty risk - is being abandoned.

However, as James Sinclair from vendor MarketFactory said: "It was a bold strategy and [FXMarketSpace] assembled a particularly impressive team. It was up against a lot of obstacles, including the separation of futures and cash systems at many banks, [the fact] CLS and prime brokers had already reduced credit friction in the market and the advantage of participants local to the matching engine. Nonetheless, its team really worked the issues and was very innovative, for example with FXSettle."

Dealers say trading volumes are being driven by people that need to trade. There's now a price for transacting, for liquidity and for credit. According to one dealer, opportunistic trading, particularly by algorithmic traders, is not even possible in these market conditions.

"The spreads are coming in and out and are just too wide, so you are getting killed on your algos," he said. "It's just too expensive to trade."

The theme that seems to resonate across the sell side is that the markets are in a different spread environment. One source said: "We've had a jump in spreads and of course, while they will start to compress eventually, it is just a different machine. Spreads are priced differently and market volatility is higher. It will take a long time to go back to the levels they were at a year ago, if they ever come down to that level."

This presents a problem for the pure algorithmic trading shops who will struggle to get liquidity, credit lines and pure algo support as the costs go up. As one of the fastest-growing segments of the market, this presents questions over the future pace of growth of FX volumes.

Having said that, retail trading companies still report buoyant volumes.