FX debate: Alpha quest drives FX market growth
• The FX market is being transformed as new players seeking alpha enter it to compensate for low returns elsewhere
• Lower transaction costs as a result of IT innovation and the use of algorithmic trading mean that the quest for alpha in FX is more practicable
• Both active leveraged trading strategies and increased involvement from central banks as active asset managers in FX have boosted the markets
• Emerging market currencies are playing a bigger role since the arrival of the euro shrank volumes, but liquidity risk is often overlooked
• Electronic trading is playing a growing role in run-of-the-mill transactions and this has opened opportunities for specialist services and advice to be offered over the telephone
• The changing character of the market has placed new demands for focus and relevance on FX research