Exchanges and the over-the-counter (OTC) market might have moved a little closer in recent years, but it is far from inevitable that demand for greater trading clarity will push a sizeable chunk of the market away from OTC.
On one hand, FXSpotStream CEO Alan Schwarz said: "the FX market continues to do a good job of addressing regulatory requirements and meeting the demands of market participants. We have seen a shift in the FX market looking to trade more on a disclosed basis. Our business has continued to see year-on-year growth because there is a move taking place from exchange-like anonymous trading to bilateral, fully disclosed trading between counterparties."
On the other hand, Kevin McPartland, head of market structure and technology research at Greenwich Associates, believes that discussion of migration from OTC to exchange fails to take account of some of the nuances of the FX market and that the future lies in venues that support multiple trading models.
"There are a host of non-exchange electronic trading venues that allow clients to trade with each other in a variety of ways," he says.
According to James Sinclair, CEO of MarketFactory; "options and other derivatives are moving closer to an exchange model due to the direct effects of regulation and the increased costs of compliance in OTC markets."
Please read the full article here.