Diversity beats centralization

FXMarketSpace was born out of the general belief, current a few years ago, that markets such as FX would "evolve" towards the exchange-based model of equities, and that this somehow represented the pinnacle of trading organization.

Instead, almost the exact opposite has happened. The rapid growth in reach, complexity and sophistication of electronic trading systems has resulted in ever-increasing decentralization and diversity of execution venues and liquidity pools. Far from FX mimicking equities, equities trading is becoming fragmented and diversified away from traditional exchanges, and becoming more like FX.

How much further will the process go? Are we heading for ever more complex and dispersed trading environments, or will the pendulum start to swing back towards a smaller number of concentration points?

Clearly the CME isn't betting on the second option happening any time soon, at least not in FX.