Provision, distribution and consumption Is liquidity changing the operational dynamics of the FX Marketplace?

e-Forex talks to Justyn Trenner, Global Head of Liquidity Optimization at EBS, Joe Conlan, Global Head of FX Sales at INTL FCStone Markets, LLC, Yaacov Heidingsfeld, Chief Executive Officer, Co-founder of TraderTools Inc., Paul Tivnann, Head of Foreign Exchange and Commodity Electronic Trading at Bloomberg L.P., John Miesner, Managing Director, and Global Head of Sales for KCG Hotspot FX LLC, to discuss how the provision, distribution and consumption of liquidity may be altering the way the FX market has traditionally functioned, and to assess the wider consequences of this.

First Published: e-Forex Magazine 54 / e-Forex Roundtable / October, 2013

In what ways is liquidity still a function of and driven by relationships, and what are the implications of this for the future of electronic FX trading? JT: At its core, the FX market always has been and continues to be driven by the real needs of individuals, corporations, governments and investors. These market users all need two fundamentals of banking – credit and risk transfer or warehousing. To an extent, relationships in forex trading became secondary as we passed through an era of cheap, and arguably, mispriced credit accompanied by the emergence of e-commerce facilitating and democratising the means of risk transfer. We have now entered a phase where this important connection is being renewed and reinforced. Firstly, end-customers are recognising value and linking their trading more effectively to their core bankers. Secondly, while the growth of electronic trading with transparency of pricing may compress margins, the same mechanisms make it easier for regional banks to service their...continued

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