Nicholas Pratt
Nicholas Pratt

Groping in the Dark: FX looks for hidden pools of liquidity

Nicholas Pratt sets out to discover more about the idea of dark trading and hidden pools of liquidity which is the latest phenomenon to make the journey from the equities market to its FX counterpart.

First Published: e-Forex Magazine 31 / Features / April, 2008

The equities market has been responsible for a lot of the newest developments in the FX market. As electronic trading starts to gain traction among FX traders, providers and participants have begun to wonder what else may be able to successfully translate from the land of stocks and shares to the world of euros and dollars. In some areas, such as electronic trading, the transposition is both obvious and straight-forward but in other areas the applicability seems to be more speculative. Algorithmic trading is beginning to make an impact in FX, although it is still not clear what form the most popular algorithms will take and even then, it is thought that algorithmic trading will only account for a minority share of the market in this lifetime. Elsewhere, on issues such as the demand for anonymous trading and an exchange-style marketplace, the jury is most definitely out. The latest such phenomenon to make the journey from the equities market to its FX counterpart is the idea of dark trading and hidden pools...continued

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