Just finished reading a new report and survey from exchange operator LMAX, called “Restoring trust in global FX markets – Striking a balance between transparency and efficiency”.
It’s detailed, with lots of charts and tables and expert opinions, and covers much ground, including topics explored in recent posts around transparency, the FEMR report, and the issue of last look and more.
David Mercer, CEO of LMAX starts by stating:
Liquidity providers (LPs) and market makers need to be rewarded for the risks they take, and in order to enjoy the benefits of transparent price discovery and firm liquidity, customers must meet the costs of the service provided. Fair execution must come at a fair price, and transparency cannot come at the cost of destroying liquidity provision.
Customers have benefited from new technology, with spread compression and lower commissions. However, traditional LPs have had to invest heavily in technology to support globally distributed client base, whilst facing ever more sophisticated buy-side customers and smaller, more naturally agile competitors in the realm of liquidity provision (ie: non-bank market makers).
Mercer, adds that there is much that LPs can learn from these new entrants, including:
elements of exchange-style trading that create a fairer trading environment.
Proposals currently being considered to enhance transparency in the FX market risk disadvantaging Continue reading
Filed under: FX, OTC, Paul Blank, Regulation, Single-Dealer Platforms, Survey Results | Leave a comment »