Nicholas Pratt
Nicholas Pratt

Prime of Primes - Bridging the gap between the retail and institutional FX markets

As Prime of Primes continue to fill the gap left by prime brokers withdrawal from parts of the FX market, Nicholas Pratt examines whether the PoP model can endure in the long-term and truly act as the bridge between the retail and institutional FX markets.

Many of the world’s most iconic landmarks were never meant to be permanent. Famously the Eiffel Tower was purpose built for the 1889 Paris Exposition and scheduled to be taken down 20 years later in 1909. And more recently the London Eye, a Ferris wheel built for the millennium celebrations, was expected to be dismantled in 2005 but has proved so popular and profitable that it still stands today. The prime of prime brokers (PoPs) that are rapidly becoming a growing feature of the FX market have similarly arisen due to ‘events’ – in this context, the withdrawal of several FX prime brokers (FX PBs) from servicing the middle class of FX trading firms. Several market participants deemed too expensive to service found themselves without a source of credit or access to liquidity and prime of prime brokers stepped into fill the void. However, while the FX market is subject to cycles, it could be that the PoPs, much like the fancy buildings erected to exhibitions and the like, end up...continued

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