A Changing Market

By John Younghusband

FX-MM magazine, which covers the latest developments in Capital Markets and finding as well as risk management and technology issues, places a bylined article by John Younghusband of DataArt, where he reflects on how technological developments have changed the face of FX trading.

As with the stock and commodity exchanges, where new technology has increasingly replaced the traditional open outcry market floors, in foreign exchange the old methodology of banks trading desk-to-desk via dedicated private voice circuits is gradually disappearing. Recent growth in program computer trading is the result of technological developments; a combination of greater computing power, lower telephony costs and “fibre to the kerb” provision for faster connectivity.

Significant volumes of FX trading are done entirely electronically. This change in trading methodology started with the launch of screen trading systems by the banks themselves, such as Deutsche Bank’s “Autobahn” and Barclays “BARX” in the late 1990s. This touched off an arms race in the industry which continues unabated with the emergence of a plethora of competing platforms, each boasting new features and technological advancements.

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