Research finds banks offering competitive Forex liquidity

Banks are offering competitive foreign exchange liquidity through the majority of market conditions, according to research by New York-based training technology provider Pragma.

Contrary to the widespread belief among some in the industry that regulation is limiting banks’ ability to provide foreign exchange liquidity the research, which looked at the bilateral streams of seven major banks over two years, found that banks have maintained their provision of liquidity, even through times of market turmoil

Events in which banks actually stop providing liquidity are “exceedingly rare”, Pragma said.

The research looked for times when banks stopped quoting bilateral stream prices and when they make prices less competitive than those on electronic communications networks, effectively withdrawing liquidity.

Over the past two years, Pragma said it could identify only three events when banks stopped quoting altogether: the sterling flash crash, Swiss unpegging and the equities flash crash of August 2015.

©2017 funds europe

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