The 21st century generation of FX broking and trading

One of the great challenges to the institutional foreign exchange market has been the emergence of the internet and internet-based trading platforms. These changes have challenged the very domain of institutional investors and how they conduct their foreign exchange business.

On the electronic broking side, systems such as EBS (short for ‘electronic broking system’) and Reuters are providing computer platforms where bank dealers and traders can input their prices directly to the computer without the need for a human broker to take their prices down. This includes the process of collecting prices from all contributing banks automatically. And, because of the instantaneous response of these platforms, prices are not just indicative, they are the actual dealing prices. This has, in turn, significantly speeded up the process of price discovery and also contributed to the market’s overall transparency, while at the same time reducing the costs to participating banks.