FX survey 2011: Banks take fight to the algo traders

Electronic trading has transformed foreign exchange into a $4 trillion a day flow monster, delivering record revenues to those with scale. But by focusing on building their own internal platforms, banks have left themselves open to attack from the high-frequency traders, who pick them off at will and force them to hold more risk. Now the banks are fighting back. Hamish Risk reports.

Results index
Buy side excited by multiple choice HSBC raises its game
Banks take fight to the algo traders Methodology

“IT’S LIKE HAVING internet sex,” a veteran FX trader tells Euromoney, mangling his metaphors over beer and burgers one April evening, searching for a layman’s explanation for the complexities of high-frequency traders’ behaviour in his market. But perhaps he has made his point well. Because today’s foreign exchange market has become a forum populated by participants who hold multiple identities or aliases to conceal their true selves, where accepted market behaviour is no longer adhered to, attention spans are skittish, and the moment things get a little dicey those participants disappear into the ether.

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