Justyn Trenner CEO ClientKnowledge
Justyn Trenner CEO ClientKnowledge

e-Commerce development – reducing FX related costs

Justyn Trenner and Simon Watkins look at how the increasing use of e-commerce and electronic trading platforms is impacting on FX related costs.

Simon WatkinsHead of ClientReportsOver the past few years, there has been a paradigmatic shift in the basic architecture of the world’s foreign exchange (FX) markets. We see no signs of this losing its momentum, particularly given the increase in the use of electronic trading platforms and the implications for cost, price, and liquidity that this engenders. Even as late as 1994, the FX market was essentially a two-dimensional one, with a distinct demarcation between those players who were price-makers (the banks), and those who were price-takers (everyone else). At that time, the entire deal process might routinely take 20 minutes or longer, and would involve a multitude of manual stages across a range of departments, each of which rated high on cost and low on efficiency. At around that time, according to BIS data, around US$1.5trn a day was being traded in the global FX market, with roughly US$1.05trn stemming from interbank dealing, and the remaining US$450bn from the broad customer space....continued

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