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TraderTools, which traditionally services banks and brokerages, is looking to add the buy side to its customer base through a planned new initiative, which could see the liquidity aggregator dealing directly with asset managers, FX Week has exclusively learned.


The service, of which details will emerge in the autumn, comes in response to a significant tightening up in the credit space since January 2015. The cost of credit has subsequently been rising at the same time as accessibility has narrowed.


“Buy-side market participants need options in executing business. Historically, TraderTools only serviced banks and brokers. Now it is time to look beyond that, and either enable our banks and brokers to better service those buy-side customers or, in certain cases, service those buy-side customers directly,” says chief executive Yaacov Heidingsfeld.


The firm is currently in talks with about 30 large buy-side players, as it continues to build critical mass for the service while seeking out additional liquidity sources amid rising demand for its Unique Liquidity Network pool, especially in emerging markets currencies.


“We are not adding supply fast enough and we are continuously looking for additional sources of supply, because the demand is there, it is waiting and it is ripe to access. Credit intermediation becomes a very important part of the process,” says Heidingsfeld.


While historically, some of the buy side tended to prefer anonymous liquidity pools, the industry’s intense focus on execution quality is slowly changing behavior as money managers – in common with their sell-side counterparts – are having to provide greater transparency to investors to show best execution was achieved, or even attempted, for each trade.


“TraderTools has always been about relationship pricing. Historically, the buy side may have had a preference for dark pool execution. What we are hearing, and what we are responding to, is that same customer saying, ‘we don’t care if somebody knows what we are doing – as a matter of fact, we are very happy if someone knows what we are doing, as long as it results in a better execution’,” Heidingsfeld adds.

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