Nicholas Pratt
Nicholas Pratt

Liquidity Discovery - coupling complex FX execution strategies with advanced order routing technologies

The FX market has changed considerably since the advent of electronic trading. While such a development has been clearly beneficial to the market and all its participants by instilling more efficiency into the process, reducing operational risk and allowing for greater volumes to be traded, it has opened a Pandora’s Box in terms of liquidity.

Although the FX market has always maintained a somewhat idiosyncratic market structure in comparison to other asset classes, it was historically dominated, in a market-making sense, by a handful of players in the all-powerful interbank sector. This state of affairs has undergone a fundamental change in that there is now a whole host of liquidity providers, each with their own particular approach and unique selling point. Furthermore, the increasing numbers of buy-side FX participants are enjoying an unprecedented level of access to all of these sources. However, in keeping with the information overload of the internet age, the danger is that these buy-side firms become overwhelmed in trying to keep track of all of these different sources. The response to this fear has been the development of liquidity management technology, designed to help traders track the ever-changing liquidity in the market, to discover the best prices at a specific time and then execute their trades in accordance with these...continued

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