BIS: e-FX may impact liquidity, volatility

In a paper made public this month, the BIS puts forward the case that developments in e-FX and the forex market generally have resulted in reduced volatility and liquidity. While it concludes that electronic trading is yet to impact the markets in this way, the report said: "There are concerns that these changes will soon adversely affect liquidity and volatility in foreign exchange markets."

Pre-electronic trading, the report said, FX dealers tended to execute small trades regularly

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