As their assets continue to grow, the world’s biggest hedge funds, asset managers and pension funds have become increasingly bullish about their status in the foreign-exchange market.
But even the largest firms’ total assets under management are equivalent to only a single day’s trading on what is the world’s largest financial market. And as Euromoney has previously reported, market participants are choosy about the liquidity providers they work with.
That is good news for banks.
“We haven’t come across a lot of clients telling us that they are so big that they now see themselves as liquidity providers,” says Asif Razaq, global head of FX algo execution at BNP Paribas. “The trend we are seeing is that clients value the liquidity banks bring to them, either from the interbank market and trading on primary venues, secondary electronic communications networks (ECNs), internal bank liquidity, or seeking liquidity via the bank’s client franchise.”
There have been efforts to get peer-to-peer matching platforms up and running. However, they are a very small part of the overall market
ECNs are curated liquidity pools where clients can typically show as well as take liquidity.
