Wednesday, December 24, 2008

2 FX interbank broker ^ 2 interdealer treasury broker

Treasury Inter-dealer brokers are the backbones of treasury market. BrokerTec and Espeed...

FX interbank brokers are the backbones of currency market. In Spot FX, EBS and Reuters (see separate blog) are the only 2 big brokers. See http://en.wikipedia.org/wiki/Interbank_market and the investorpedia article. Big banks handle very large transactions often in billions of dollars. These transactions cause the primary movement of currency prices (in the short term?) In the long term, fx is influenced not by the big bank's actions, but economies.

Reuters' system for Spot is a the electronic version of traditional voice execution. A screen-based "conversational" system so both sides know each other. Trades execute in the conversation, much like voice execution.

In contrast, EBS is anonymous. Trades execute when market-takers hit a button on screen.

For FX Forward, Reuters (see the other post) is dominant, but Tullet Prebon is popular too.

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http://www.linkedin.com/in/tanbin