FXPBs over-allocating credit to algorithmic and high-speed trading

Thinly capitalised trading firms are an accident waiting to happen while dealings on multiple venues make credit limits hard to set, claim market participants

Bloated by the algorithmic dealings of lean firms bountifully staked by foreign exchange prime brokers (FXPBs), the $5 trillion-a-day FX market is at risk of blow-up, according to a range of market participants concerned about the lax use of risk tools.

The problem is exacerbated by the way venues for spot FX operate their matching engines, meaning FXPBs face impediments when measuring risk on a net basis.

“Every day, hundreds of billions of dollars of credit is extended across the Street to

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