Laurie Berke Senior consultant with the TABB Group
Laurie Berke Senior consultant with the TABB Group

Winds of Change in the Currency Markets: Evolution or Revolution?

Toto, this sure doesn’t look like Kansas. The winds of change are blowing - around the FX trading business. Will they carry market efficiencies over the rainbow? Or…drop a house on a witch?

After a brief pause in volume growth in the late-1990s on the back of the LTCM debt crisis and the advent of the euro, FX daily trading volume has resumed its ‘normal’ growth rate.  The movement toward globalization of industry, the easy money investment environment, massive growth in available investment capital, growth in derivatives, and the stretch for alpha into new markets and asset classes are pushing volumes in the FX marketplace to upwards of $3 trillion in value per day.   Part of that volume growth can be attributed to the arrival of a new source of trading activity—financial markets investors trading FX as an asset class who bring with them new tools and new demands.   Their arrival has seen a push for change in an OTC marketplace that has historically had little in the way of pricing transparency and no regulatory oversight.  As this trend continues to progress, it begs the question, “Can these financial industry players really have an impact on...continued

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