Foreign Exchange Market Structure, Players and Evolution

By M. King, Carol Osler, Dagfinn Rime. 2012

112 citations recorded by the source corpus.

Electronic trading has transformed foreign exchange markets over the past decade, and the pace of innovation only accelerates. This formerly opaque market is now fairly transparent and transaction costs are only a fraction of their former level. Entirely new agents have joined the fray, including retail and high-frequency traders, while foreign exchange trading volumes have tripled. Market concentration among dealers has risen reflecting the heavy investments in technology. Undeterred, some new non-bank market participants have begun to make markets, challenging the traditional foreign exchange dealers on their own turf. This paper outlines the players in this market and the structure of their interactions. It also presents new evidence on how that structure has changed over the past two decades. Throughout, it highlights issues relevant to exchange rate modelling.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/8df60f8e0f6c9c02910c5b4a668f49165f7ea8b8

Citations in the corpus

• Click or Call? Auction versus Search in the Over‐the‐Counter Market (2012, unknown): “…brokerage access to these systems and end-customer oriented electronic systems eliminated the over-the-counter trading in liquid currency pairs (see King, Osler, and Rime (2012) for a survey on foreign exchange trading and its evolution), although OTC still dominates for currency swaps and larger…”
• Currency Momentum Strategies (2012, unknown): “Overall, volumes, tradable assets and participants have changed, which culminates in the perception of FX as a separate asset class, in parallel to e.g. equities and bonds (King, Osler, and Rime, 2011).”