Adam Sussman Consultant with the Tabb Group
Adam Sussman Consultant with the Tabb Group

FX Trading and the Risk to Prime Brokers

Adam Sussman looks at why Prime Brokers will need to upgrade their technology to keep pace with the rate of change as the FX market continues to evolve.

First Published: e-Forex Magazine 19 / Features / July, 2005

Steep increases in volume and the spread of electronic trading in the FX markets is challenging the legacy systems of some major prime brokers and banks. Some of these systems are not designed to perform complex credit and market risk calculations in an environment of lightning quick executions, market data floods and complex hedging strategies. As the FX market continues to evolve, prime brokers will need to upgrade their technology to keep pace with the pace of change.The amount of foreign currency being traded has significantly increased over the last few years. A multitude of firms are trading currencies, from companies beginning to execute overseas transactions to multi-asset class hedge funds. At the same time, the foreign exchange markets are becoming more electronic. Transaction speeds and volume are increasing in tandem.These events are putting increased pressure on banks and prime brokers to upgrade their architecture. Based on a survey conducted by the Bank for International Settlements (BIS) in...continued

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