Key players in the international swaps markets, instead of trading swaps, are swapping insults over the state of play in electronic trading of these complex instruments.

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Here we go again. Somehow, these dealer-initiated ventures always seem to end up the same way: complicated.

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Two years ago, at the height of Internet frenzy, the sensible money – that is, the Old Economy money – would have been on Currenex to be the first to fail among the three main emerging FX trading portals. Visitors to the company’s headquarters, just outside San Francisco, were left with the impression of the short-haired hippieness of the era: ‘quality’ (ie., Starbucks) coffee, chinos, open-plan offices with searing ceilings in a fashionably clean warehouse location. No chance of competing in the London-based currency marketplace.

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In the 1990s, Reuters’ share price enjoyed a skyward ride on the back of Instinet’s dominance of the electronic brokerage business. Reuters shareholders won double when Instinet’s IPO yielded a massive cash injection. But following the tribulations of the past month, Reuters’ continuing investment in Instinet must appear to the company and its owners as a decidedly double-edged sword.

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