HFT Pushes Small Banks Away from Major Currencies'
High frequency traders have had the same effect on foreign exchange that the conversion from eighths to penny increments had on equity trading, says Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. Major currency pairs now get quoted to an extra decimal point. For combinations such as the U.S. dollar and the euro, that means banks are trading on thousandths of a euro cent.
“We found that spreads between bid and asked are narrowing at 9 percent a year, and high frequency trading is accelerating that process,” Chandler says. “We have to grow our volume by 10 percent a year just to break even, which is harder and harder to do because it’s like compounding in reverse.” '
News Brought to you By:
Gibraltar GX11 1AA
T +350 200 40303
F +350 200 51795
★★★Social Infrastructure Planning and Digital Marketing Services by SEOextraordinaire★★★