Carlo Kolzer Head of Product Development and co-founder of multiproduct eTrading platform 360T
Carlo Kolzer Head of Product Development and co-founder of multiproduct eTrading platform 360T

eTrading : an opportunity to improve OTC market mechanisms.

Carlo Kolzer explains how new web-based technology has the potential to improve buy-side access to liquidity by reducing credit risk related restrictions.

First Published: e-Forex Magazine 7 / FOCUS / July, 2002

Along with the rising interest for eTrading FX and other OTC financial instruments, a frequently discussed topic is "liquidity". In most of the exchange traded asset classes, buy- and sell-side are free to trade with any desired counterparty as a delivery-vs.-payment mechanism is ensured. However, in the OTC market liquidity is traditionally limited to a specified number of providers by the required credit relationships a participant needs to maintain for trading. The new technology of web-based trading platforms bears the potential to improve the buy-sides access to liquidity by reducing or even eliminating the credit risk-related restrictions with particular providers. The current stage As opposed to an exchange environment with an n x m number of anonymous transaction relations, the current OTC market is a so called "principal-to-principal" environment, based upon relatively steady customer relations between buy-side clients and their chosen liquidity providers. This is...continued

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