Scott McLeod Caplin Systems
Scott McLeod Caplin Systems

e-FX: Key trends in development and deploymen

Scott McLeod at Caplin Systems, takes a look at some of the key questions and perceptions surrounding the development and deployment of e-FX

Market concentration —a growing barrier to entry in eFX? The most recent BIS FX survey shows that volumes have increased by over 71% over the last three years. In addition, the degree of concentration is getting larger – in other words, the big banks are getting bigger. In the most recent Euromoney survey, 80% of global volume was accounted for by just 10 banks and the top five banks accounted for just over 60% of volume. This degree of concentration is more pronounced in the electronic trading, where the top three banks account for over 85% of total electronic volume, compared to just over 70% of volume in 2007. The ability of these top banks to continually innovate their business models and trading services results in a clear barrier to entry to competitors. Is this barrier permanent? While the early participants in the electronic trading area built the majority of their capabilities in-house, product vendors are now offering viable solutions in the algo, pricing, risk management and...continued

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