For many active traders within the foreign exchange sector Currenex is the trading weapon of choice. It has a world class reputation of reliability and excellent speed of execution: the two items that matter most with frequent traders. Currenex attracts various entities from private active traders to prop shops to hedge funds and everything else in-between. However, there are many myths that surround what Currenex is and isn’t. I hope to clarify within this piece some of the truths from fiction.

At its most basic level Currenex is a software white label. White labeling software is simply when a brokerage firm leases software from a technology provider and has the ability to have their logo and other company information on the platform. Even when looking closely at a white label you would think that the software is a firm’s own propriety technology.

Regardless of what forex brokerage firm(s) that you utilize to trade on Currenex the trades are executed with the Currenex technology infrastructure. However, the liquidity and spreads will vary from broker to broker. For example, broker A may have 6 tier 1 banks providing liquidity while broker B may have 10 tier 1 banks providing liquidity. This is why the spreads and liquidity will be different at each forex broker but you will still have the same exact reliability and speed of execution.

Many times you can find on various forums individuals referring to Currenex as a forex ECN. Within the same post you will find people posting that this isn’t true and that it’s a white label. Well the correct answer to this is it’s both. As mentioned above Currenex is a white label. But in addition to having a proprietary mix of FX bank liquidity brokerage firms offering the Currenex platform also have the option to add the Curreenx ECN into the platform.

At its core level if you were to view just the Currenex ECN at different brokers you would see the exact same spreads and liquidity. One key item to keep in mind though, if you are trading on a Currenex platform and have the ECN added into the liquidity pool you can’t be guaranteed that your broker is presenting core rates with no mark-up. This is due to the fact that you can’t mark-up spreads as a broker if you offer the ECN in addition to your bank liquidity. If a broker is only offering tier 1 bank liquidity without the Currenex ECN then the possibility exists that a spread mark-up is being applied. However, don’t assume because the ECN isn’t present that the spreads are automatically marked-up because this may not be the case.

Judging from my past experience once you tell a particular trader this they automatically want the ECN mixed in because of the additional liquidity; even if guaranteed the spreads being presented are core rates. And who could blame them as more liquidity is always a welcomed thing? But you must be careful as there are pros and cons. If you add the ECN into the mix you will surely have more liquidity. However, you may experience higher trade rejections. This doesn’t only apply to the Currenex ECN but to all foreign exchange ECNs. This is due to the fact that forex ECN’s traditionally will have designated liquidity providers such as prop trading firms. Many times these prop trading firms will have a last look back provision and this leads to higher trade rejections. Also, with more high frequency algorithms on an ECN trade rejections also increase. If trading only on bank liquidity you won’t be able to "hit" the other side of an algorithmic trade. This will most likely ensure a lower level of any possible trade rejections.

In closing, I hope this short piece sheds some light on your understanding of Currenex. I plan on posting a number of short pieces in the near future on some other Currenex fallacies. If you have any questions on the Currenex platform please feel free to contact me with them.