Mark Galant a 20-year Wall Street veteran, is CEO and founder of GAIN Capital, a Warren, NJ–based provider of foreign exchange services, including direct access trading and asset management. For more information about GAIN Capital
Mark Galant a 20-year Wall Street veteran, is CEO and founder of GAIN Capital, a Warren, NJ–based provider of foreign exchange services, including direct access trading and asset management. For more information about GAIN Capital

Liquidity – the achilles heel of eFX

While liquidity has decreased over the past few years, the uptake of eFX is not the main culprit says Mark Galant, who traces the impact of electronic trading in shifting liquidity amongst different FX players.

First Published: e-Forex Magazine 9 / Marketplace / January, 2003

After a tumultuous start, eFX is finally hitting its stride. Both the major multi-dealer portals as well as several independent platforms have all recently reported a significant rise in transaction volumes. As success is never without controversy, some market participants are now questioning the impact of electronic trading on market liquidity and volatility. Truth be told, the uptake of electronic trading has not had a material impact on FX market liquidity to date. It is, however, drastically altering the market landscape and affecting both buy and sell side market participants in a variety of ways.To begin, it is important to make the distinction between dealer-to-dealer and client- to-dealer electronic trading. While current estimates figure electronic trading on EBS and Reuters 3000 to account for more than 60% of all interbank volume, only 15-20% of customer-to-dealer transactions are currently transacted online. Notwithstanding the current usage, let’s consider the impact of eFX on each...continued

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