Andy Webb
Andy Webb

Liquidity provision: an alternative slant on multi-portal strategies

Andy Webb looks at the challenges facing banks who need to stream quotes across multiple FX portals.

The need to stream quotes across multiple FX portals has presented banks with a major liquidity management challenge. As a result, applying the traditional FX market making model across all client groups and multiple FX portals is now looking an increasingly unattractive option. Andy Webb examines the issues and outlines an alternative solution.FX portals have become an everyday part of life in the FX market, and in the process have also fundamentally changed the nature of the foreign exchange businesses. One of the biggest changes has been transparency, with clients able to compare quotes across multiple banks and portals with ease. This improved visibility has inevitably driven a contraction in quote spreads. Yet despite this, banks have been both supporters and instigators of the multibank portals that have been primarily responsible for this compression in dealing spreads.In fact, one could almost describe banks’ early activity in this space as a rush to action. For example, 2000 saw a...continued

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