Established participants in the equities and commodities markets view over-the-counter foreign exchange as an alpha-generating opportunity. As equity markets brace themselves for new levels of regulation and confront an on-going period of lower return on investment for traditional investing, the search for alpha is taking traders into new asset classes, and FX presents a compelling opportunity.
FX
FX is the world's most liquid market, with average daily volumes estimated at USD4 trillion, according to EBS estimates. It is a vibrant marketplace combining the professional dealing desks of the world's largest banks, regional and smaller banks, hedge funds, proprietary trading firms, fund managers, as well as a growing number of retail-level investors.
OTC FX is a self-regulated market and functions remarkably well as such. A recent example is offered by the 6 May 2010 EUR/USD price action on the EBS platform. Driven by volatile markets responding to the Greek debt ....