eFX: Speed or Bleed. Globally Fragmented Liquidity and Ultra Low Latency Forex Trading.
First Published Tuesday, 11th January 2011 12:52 pm from Automated Trader
Forex traders knew all about fragmented liquidity long before the equity trading community had to grapple with the fragmentation problem. But the move first to electronic trading, followed by the arrival of high frequency FX traders has had its challenges. And opportunity springs from challenge. Bob Giffords speaks to the key players to find out how the FX trading community has adapted to an ultra low latency trading environment.
As traders go global, the foreign exchange (FX) markets move to centre stage, and speed is essential. "Algorithmic trading has changed FX as it did equities or futures," says Dave Rutter, chief executive of ICAP Electronic Broking. "Volumes are up and notional size, down. Traders also tend to feather their book with a range of prices in smaller amounts, so instead of gapping after major news announcements, we now see prices converge in a few seconds at the new level rather than taking ma...