The foreign exchange market was not the first to embrace electronic trading but it was among the earliest. The migration to dealing on screen, certainly in spot, has resulted in many benefits – the transparency it introduced has encouraged the entrance of a vast new range of market participants – but it also led to a significant decrease, ironically, in networking. The days when dealers from rival banks met up after work, often sponsored by their brokers, have long past. Nowadays, ask the USD/JPY dealer at X bank who his counterparty is at Y bank and he will most likely give a blank response.
Generally, market participants will agree that there is no point in harking back to the old days but there seems to be a grudging realization that networking, which at its simplest level means knowing who your counterparties are, is extremely important.
Morgan McDonnell, the head of global...
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