Pathways to Asia - what are your FX connectivity options?

Dan Barnes explores some of the characteristics of the foreign exchange markets across Asia and the key connectivity and infrastructure issues that FX firms need to consider in order to configure the best routes for accessing them.

Three factors – speed, reliability and breadth – are crucial for foreign exchange traders’ connectivity infrastructure in Asia. Of the three, the breadth of counterparties available is increasingly important. “The markets have become more fragmented over the years when it was thought that we would see some consolidation in the price-making and ECN space,” says Chris Knight, Head of E-Trading (East) FX, Rates & Credit, Standard Chartered Bank. “I speak to clients that have 20 or 25 different sources of liquidity.” Chris Knight “There are big clients that trade and match in Singapore, for instance, and when the main data source is in Tokyo, the price they see could have been delayed by many thousands of a second,” Trade-related flow The spot FX market within the Asia-Pacific region can be characterised as largely trade-related, rather than speculative. Compared with other regions it has a greater likelihood of central bank...continued

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