The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Centralised exchange: The nail in the coffin of the exchange argument

For years the debate raged about when FX would embrace a model like the equity market and move on to a centralised exchange. For a time, I subscribed to this view, especially around the time I tried somewhat cheekily to buy EBS – but that’s another story.

Of course, as we all know, the market has continued to thrive in its fragmented state and technology has, for many players, made the concept of pooled liquidity a – virtual – reality. Interestingly for us anorak-wearing market watchers, the equity landscape appears to be moving to an FX-like model, rather than the other way around.

In Europe, the Markets in Financial Instruments Directive (Mifid) is starting to have an impact. In the UK, the London Stock Exchange has consistently played down or even dismissed the threat of competition that this will bring, despite being forced to cut its tariffs and (supposedly) upgrade its technology. And it continues to dismiss the threat, even after the debacle of a massive system failure on Monday that resulted in the loss of almost the whole trading session.

An LSE spokesman somewhat naively pointed out to me that there was no significant increase in volume on Chi-X, a rival trading facility, because activity ceased as there was no dealing on the main exchange. For the moment this is true. But things will almost certainly change, especially once the big brokers sort out their order routing capabilities.

It wasn’t so long ago that EUR/USD trading would stop almost completely if EBS suffered an outage.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree