The debate about whether or not the foreign exchange market will ever fully adopt an exchange-traded model has been raging for years. It is likely to continue, with proponents and detractors able to put forward good arguments why it will and why it won’t.
A frequent claim is that activity in the exchange-traded FX market is minuscule when compared with the over-the-counter environment. Ostensibly this appears to be true but a more complex, different picture lies underneath the bare figures.
According to the most recent Bank for International Settlements Triennial Central Bank Survey, overall daily activity in April 2004 in the OTC FX market totalled about $1.9 trillion. By contrast, notional volume at the Chicago Mercantile Exchange, by far the largest regulated FX marketplace, came in at just $17 billion a day during the same period, less than 1% of the total turnover. ...
