Andy Webb
Andy Webb

Trading venue proliferation: fragmentation versus segmentation

Andy Webb examines what new FX trading venues will have to offer in order to be competitive in a market that many see as already over-supplied.

First Published: e-Forex Magazine 25 / Leader / October, 2006

The rapid growth in interest in FX trading since 2000 has seen a huge expansion in the number and type of venues offering electronic FX execution. These offerings have ranged from those catering for the very largest institutions that need to trade large size with stealth, to those that allow the smallest retail trader a speculative outlet. The announcements from Lava Trading and Reuters/CME over the past few months appear to confirm that this venue expansion is still ongoing. But does this expansion automatically equal fragmentation of liquidity? And what will new trading venues have to offer in order to be competitive in a market that many see as already over-supplied? Whatever your motivation, if you want to trade FX you are now pretty much spoilt for choice. The market already seems awash with trading platforms that seem to cater for every possible category of participant - but still they keep coming. This has driven some commentators to question the value that these additional venues really offer, if...continued

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