It is projected that by the year 2017, there would be equity style trading being done in the foreign exchange market. Should this happen, all the market participants can have unrestricted access to currency liquidity and this is a shift that would present many challenges to banks and other financial institutions that participate in what is now the biggest financial market in the world.
This is the point view taken by GreySpark, which promotes the removal of distinctions between the current interdealer market and the up and coming dealer to consumer foreign exchange market. This will end up as an 'all to all' trading model, allowing non bank market players to trade currencies between and amongst themselves.
This restructuring of the foreign exchange market, in GreySpark's view, traces its roots from the after effects of the most recent global financial crisis. During those dark and gloomy days, banks were divesting themselves of assuming warehousing risks due to structured as well as complex financial instruments to flow related businesses, such as spot rate foreign exchange transactions as well as equities.
According to GreySpark Managing Partner Frederic Ponzo, "The big difference between a financial industry geared towards complex financial instruments, as opposed to being geared towards flow trading, is that flow business is less capital intensive in terms of balance-sheet usage, but a lot more capital intensive in terms of technology costs."
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