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Trading in London accounted for 36.7% of the total, making London by far the most important global center for foreign exchange trading. In second and third places respectively, trading in New York City accounted for 17.9%, and Tokyo accounted for 6.2%.
Turnover of exchange-traded foreign exchange futures and options have grown rapidly in recent years, reaching $166 billion in April 2010 (double the turnover recorded in April 2007). Exchange-traded currency derivatives represent 4% of OTC foreign exchange turnover. FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.
The Foreign Exchange Interbank Market
How does a bank offset risk?
Similar to the way we see prices on an electronic forex broker’s platform, there are two primary platforms that interbank traders use: one is offered by Reuters Dealing and the other is offered by the Electronic Brokerage Service (EBS). The interbank market is a credit-approved system in which banks trade based solely on the credit relationships they have established with one another. All of the banks can see the best market rates currently available; however, each bank must have a specific credit relationship with another bank in order to trade at the rates being offered. The bigger the banks, the more credit relationships they can have and the better pricing they will be able access. The same is true for clients such as retail forex brokers. The larger the retail forex broker in terms of capital available, the more favorable pricing it can get from the interbank market. If a client or even a bank is small, it is restricted to dealing with only a select number of larger banks and tends to get less favorable pricing.
The interbank market is the top-level foreign exchange market where banks exchange different currencies. The banks can either deal with one another directly, or through electronic brokering platforms. The Electronic Broking Services (EBS) and Thomson Reuters Dealing 3000 xtra are the two competitors in the electronic brokering platform business and together connect over 1000 banks. The currencies of most developed countries have floating exchange rates. These currencies do not have fixed values but, rather, values that fluctuate relative to other currencies.
The interbank market is an important segment of the foreign exchange market. It is a wholesale market through which most currency transactions are channeled. It is mainly used for trading among bankers. The three main constituents of the interbank market are
the spot market
the forward market
SWIFT (Society for World-Wide Interbank Financial Telecommunications)
The interbank market is unregulated and decentralized. There is no specific location or exchange where these currency transactions take place. However, foreign currency options are regulated in the United States and trade on the Philadelphia Stock Exchange. Further, in the U.S., the Federal Reserve Bank publishes closing spot prices on a daily basis.
Electronic Broking Services (EBS) was created by a partnership of the world’s largest foreign exchange (FX) market making banks. Approximately USD 200+ billion in spot foreign exchange transaction, 1.5 million oz in gold and 7 million oz in silver as well as 35,000 ounces of Platinum and Pladium is traded every day over the EBS Spot Dealing System. It was created in 1990 to challenge Reuters’ threatened monopoly in interbank spot foreign exchange and provide effective competition.
EBS’s closest competitor is Reuters Dealing 3000 Spot Matching (aka D2 or D3). The decision by an FX trader whether to use EBS or Reuters D2 is driven largely by currency pair. In practice, EBS is the primary trading venue for EUR/USD, USD/JPY, EUR/JPY, USD/CHF and EUR/CHF, and Reuters D2 is the primary trading venue for all other interbank currency pairs. It’s worth noting that the currency pairs traded on EBS account for the bulk of the spot interbank market.
EBS was the first organisation to facilitate orderly black box or algorithmic trading in spot FX, through an application programming interface (API).
EBS was acquired by ICAP, the world’s largest interdealer broker, in June 2006. The acquisition will combine EBS’ strengths in electronic spot foreign exchange with ICAP’s Electronic Broking business to create a single global multi-product business with further growth potential and significant economies of scale.
This platform will provide customers with more efficient electronic trade execution, reduced integration costs and give access to broad liquidity across a wide product range.
华尔街日报援引数位知情消息人士的话报导称,从事外汇交易的大型全球银行在筹备一个仅供银行使用的交易系统,以赢回失去的外汇交易业务.
该报称,此举标志着自2005年电子交易平台(EBS)向对冲基金和高频交易商等其它非银行金融机构开放后,主要银行想努力重夺失去的交易地位.
EBS的所有者是Icap公司.
据华尔街日报称,这个尚在筹备中的平台被初步命名为Pure FX,全球外汇交易规模最大的十家银行中多数都支持建立该平台.
但据消息人士对该报称,参与Pure FX计划的银行据悉都不会考虑退出EBS,EBS的外汇报价被视为业内的指标报价,尤其是欧元、美元和日圆等主要货币的报价.
该报提到的这十家银行分别为:德意志银行、瑞银集团、巴克莱资本、花旗集团、苏格兰皇家银行、摩根大通、汇丰控股、瑞士信贷、高盛和摩根士丹利.
上述十家银行均拒绝对该报置评.路透记者尚无法立即联系上前述银行相关人士对此置评.
类似报道：大型银行寻求重新获得外汇市场的控制权
《华尔街日报》–消息人士称，外汇交易市场上举足轻重的几家大银行正寻求收复失地，准备推出专供银行使用的交易系统，而此举或将改变市场格局。
计划推出的这个系统名为Pure FX，获得了全球外汇交易市场中最大10家银行中的大多数的支持。全球外汇市场每日的现汇交易额达到1.5万亿美元，使外汇成为迄今为止最大的资产类别。
两位知情人士称，这些银行预计下周将接洽技术公司，商讨创建新的交易平台。
此举是大型银行争取在外汇交易市场收复失地的一次努力。此前全球最大的外汇交易系统EBS于2005年向对冲基金和高频交易者等非银行交易方开放。EBS由经纪公司Icap PLC持有。
开放的电子交易平台令更多的交易方可以获得外汇价格，而大型银行的做市商特权地位被削弱，敏捷的竞争者使用高速交易技术抢占了中间业务的大量份额。
国际清算银行(Bank for International Settlements)表示，大型银行在即期外汇交易市场的占有率今年已经下降至35%，首次被其他金融机构超过。
知情人士称，Icap仍有机会与大型银行合作创建新的交易系统。但如果这一合作没有成行的话，银行料将寻求其他交易平台。
大型银行推迟建立FXPure外汇交易平台
知情人士透露，大型银行推迟建立FXPure外汇交易平台，待监管环境明朗之后再做定夺，该平台已得到大多数外汇交易银行支持。
综合媒体3月3日报道，据两位知情人士3日透露，从事外汇交易的大型银行推迟了筹建银行专用外汇交易平台FXPure的计划，希望等到监管环境在未来几个月明朗之后再作定夺。
Electronic communication network: An electronic communication network (ECN) is the term used in financial circles for a type of computer system that facilitates trading of financial products outside of stock exchanges. The primary products that are traded on ECNs are stocks and currencies.
Liquidus FX
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Integral
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FXall
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HotSpot FX
BAXTER-FX
The new BLOOMBERG TRADEBOOK FX platform utilizes Bank of America (NYSE: BAC), one of the world’s largest financial institutions, as clearing and settlement counterparty.
The BLOOMBERG TRADEBOOK FX service provides a marketplace for spot dealing in more than 40 currencies and enables clients to roll their trades in 28 currencies electronically. The platform offers advanced trading strategies including event-driven orders and sweeping, time-queued and stop loss orders.
The BLOOMBERG TRADEBOOK FX platform aggregates liquidity from a diverse set of providers and BLOOMBERG TRADEBOOK participants, creating a deep natural liquidity pool for institutional investors. This platform aggregates all partial executions within an order into one single trade ticket with one average price for settlement, with the client’s choice of credit counterparty.