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In a recent conversation with Yaacov Heidingsfeld, CEO of TraderTools, Sam Low from LiquidityFinder gained insights into how their AI based PriceOn toolkit is transforming how banks and brokers create their own unique liquidity in the foreign exchange market. This is potentially nirvana for the FX market, as the market may have more unique liquidity sources from banks and brokers more successfully managing their risk and ability to price back to the market.
Moving Beyond Simple Price Aggregation
TraderTools has made a strategic shift from being just another price aggregation service to offering something genuinely different. As the market became saturated with similar aggregation technologies, TraderTools recognised the need to stand out.
"About four years ago, we were looking at the landscape and made a decision that in order to survive and thrive in this market, we would need to differentiate ourselves," Heidingsfeld explained during our conversation.
Creating Unique Liquidity Through Smart Technology
The real power of PriceOn lies in its ability to transform traditional price-takers into price-makers. Rather than simply recycling the same prices from top-tier banks, financial institutions can now create their own distinctive pricing based on intelligent analysis of their customer flow.
"The resulting flow, the net resulting flow can result in unique liquidity back out to the market," Heidingsfeld emphasised. This means brokers and banks can escape the cycle of merely passing on someone else's prices and instead become originators of their own unique liquidity.
One of the most impressive capabilities is how PriceOn reduces the need to aggressively go to market from around 80% of the time to just 25-30%. This fundamental shift allows institutions to capture more spread and manage risk internally - a game-changer for second and third-tier market participants.
A Potential Market "Nirvana"
During our conversation, I suggested that what TraderTools has created could represent a kind of "Nirvana" for many market participants. As I put it: "It sounds like Nirvana for a lot of companies in terms of reducing rejection rates, being able to price yourself and, you know, cross the spread and just be a bit more efficient and economical with your customers. And it would make the market more interesting for everybody, quite frankly."
The ability to significantly reduce rejection rates while simultaneously generating better returns through intelligent internalisation and risk management represents the holy grail for many financial institutions. Rather than constantly recycling the same liquidity sources that everyone complains about, PriceOn could enable a much more diverse and efficient marketplace with multiple unique liquidity providers.
Heidingsfeld eventually agreed with this characterisation, noting: "Going back out to the market with something that's unique and being able to provide liquidity to otherwise toxic market participants is something that I do think is nirvana."
Smart vs. Lucky: Understanding Customer Flow
The system's ability to distinguish between "lucky" and "smart" traders across different currency pairs, time zones, and market conditions creates the foundation for truly customised pricing strategies.
"If they're smart, basically what I'm going to say is if this trade can be internalised in my risk window, internalise it. If not, don't hold onto the risk," Heidingsfeld explained.
This isn't a one-size-fits-all approach. PriceOn can analyse each currency pair and trading window separately, allowing for unprecedented precision in liquidity customisation.
Transforming the Market: More Unique Liquidity Sources
The broader impact of technologies like PriceOn could fundamentally change market dynamics. As Heidingsfeld put it: "Assuming that every market participant, every market middleman has some unique offering to its customer, the resulting flow can result in unique liquidity back out to the market."
This vision represents a shift from a marketplace dominated by recycled pricing from a handful of big players to an ecosystem with multiple sources of distinctive, algorithm-optimised liquidity streams.
For regional banks, second-tier financial institutions, and retail brokers, this technology enables a transformation from price redistributors to price originators - completely changing their market relationships and economics.
Easy Implementation and Connectivity
PriceOn's cloud-based deployment, hosted in strategic Equinix facilities (LD4 and NY4), ensures reliability and proximity to major liquidity venues. Connection to TraderTools' network of over 150 counterparties enhances distribution possibilities.
"We're cross-connected to over 150 counterparties in the marketplace right now. And if a new customer were to come on board, the first thing that we would do is cross-connect them into our infrastructure to make all of the existing counterparties available to them," Heidingsfeld explained.
This connectivity framework allows newly created unique liquidity to reach the market quickly and efficiently.
Playing Offence, Not Defence
As AI-powered trading tools become more common, solutions like PriceOn represent an essential competitive advantage. Heidingsfeld frames this not as a defensive move but as strategic positioning:
"I'm a little bit uncomfortable with the idea of being on defence. I think that to run a business successfully, you have to be on offence. And on offence, you need to have all the tools available in your toolkit."
This acknowledges the reality that market participants who fail to develop unique liquidity capabilities risk becoming increasingly marginalised in a market where price originators have structural advantages over mere redistributors.
Making Advanced Technology Accessible
While Heidingsfeld was cautious about calling PriceOn a "democratising" technology, it clearly expands sophisticated price-making capabilities to institutions previously limited to price distribution roles.
"The question is, can we make this effectively available to that market so that they can adopt it and provide much more of a level playing field?" Heidingsfeld posed.
The modular approach - starting with analytics before moving to hedging and price-making capabilities - makes the technology more accessible to a wider range of institutions, potentially reshaping market liquidity by enabling more players to contribute genuinely distinctive pricing.
For more information about TraderTools and PriceOn, contact [email protected] or connect through LiquidityFinder.
Listen to the full interview with Yaacov Heidingsfeld on Spotify:
