Sang Lee Managing Partner of the AITE Group
Sang Lee Managing Partner of the AITE Group

Convergence of customer segments: What role for e-FX

Sang Lee outlines why the FX market has witnessed a certain level of convergence across different customer segments.

First Published: e-Forex Magazine 29 / Marketplace / October, 2007

With the rapid rise in overall trade volume and aggressive adoption of electronic trading, the FX market has witnessed a certain level of convergence across different customer segments. One of the most significant changes that the FX market is currently undergoing is the substantial increase in trading activities from non-bank financial institutions. In 1995, banks accounted for 64% of all trading, but that figure declined to 53% by 2004. During the same time period, trading from non-bank financial institutions increased to 33% from 20% in 1995. Some of the drop in bank participation can be directly attributed to rounds of consolidation that have occurred in the global banking market over the last decade. When examining the concentration of banks in five leading FX markets, the total number of banks that account for 75% of the total market turnover has declined dramatically, typically by at least half. Key participants One unique aspect of FX trading is the diverse nature of its customer...continued

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