John Ashworth
John Ashworth

Dynamic Liquidity Management – towards a next generation solution

John Ashworth explains how banks and other sell-side institutions are exposing their FX liquidity to an ever increasing range of FX market counterparties and the risks involved with doing this.

First Published: e-Forex Magazine 21 / Features / October, 2005

Everyone is talking about Dynamic Liquidity Management. In this article, John Ash-worth, Chairman of RiskCare, discusses:• How banks and other sell-side institutions are exposing their FX liquidity to an ever increasing range of FX market counterparties and the risks involved with doing this• Why many institutions no longer wish to allocate static limits to control exposure• How the latest technology and software solutions can assist in optimising capital allocation by dynamically managing liquidity.In the good old days, the FX market was a neat pyramid. A small number of well en-dowed investment banks made markets at the top and the great unwashed like you and me would be changing our holiday money at the bottom. In the middle of the pyramid, there was a whole selection of global banks, regional banks, asset manag-ers and corporations.A participant’s position in the pyramid governed not only with whom they could trade (typically the counterparty was a peer or at most one position...continued

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