FX Bridge raises funds, competition in fx software market?

A few days ago Atlanta-based FX Bridge Technologies Corp. announced that it has raised $500,000 from investment bank Croft & Bender LLC. So far the company has raised about $4.5 million since launching in 2007. FX Bridge Bridge The bridge or liquidity bridge is an essential component for brokers that are enabling their clients to trade at interbank rates directly via a Prime Broker or a Prime-of-Prime (PoP). While market makers do not require a bridge in order to service their clients, brokers which are sending through orders to a liquidity provider or an electronic execution venue need a bridge to connect their trading platform to the interbank market.Bridges are used extensively in forex trading, specifically for Met The bridge or liquidity bridge is an essential component for brokers that are enabling their clients to trade at interbank rates directly via a Prime Broker or a Prime-of-Prime (PoP). While market makers do not require a bridge in order to service their clients, brokers which are sending through orders to a liquidity provider or an electronic execution venue need a bridge to connect their trading platform to the interbank market.Bridges are used extensively in forex trading, specifically for Met Read this Term’s software allows brokerage clients to electronically buy and sell Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term, CFDs and options. The company makes money through software licensing and transaction fees.

Does this mean the Forex software market is open for competition? I hardly think so.

Generally speaking, Forex brokers can offer trading using either their own self developed software or commercial software developed by independent Forex software companies.

The independent Forex software market is almost completely dominated by Metaquotes and ACT Forex’s trading platforms. I’d say these two companies combined own 95-99% of the market share – clients and volume. Out of the whole retail Forex market commercial software (Metaquotes and ACT Forex) is about 60-70% with self developed platforms by brokers such as FXCM, GFT and MB Trading accounting for the remaining 30-40%, volume speaking.

The only innovation we lately see in the Forex software market is upgrading and improving of existing platforms – FXCM with CFDs, FXOpen with MT4 ECN, Metaquotes with its new MT5 or Currensee with its social Forex platform.

So it comes as a surprise to me that a skilled institutional investor picked a Forex software company for an investment. Perhaps I’m completely mistaken and FX Bridge despite what it says on its website focuses on Forex options only and not on spot trading – but then there is an arguments against that as well: Forex options market will never be as big as the spot market (which is a niche by itself) simply because it’s a much more complex instrument and it’ll take at least a few decades for the large institutional traders to turn their focus on that segment.

If after 9 years of operation in a relatively growing market a Forex software company still requires external funding – this is the biggest warning sign of them all.