A JOURNEY BACK five years to Euromoney’s 2002 foreign exchange poll (May 2002) shows that we identified a dominant theme of market consolidation then. We suggested that the market appeared set for domination by just five banks – much as today – and that consolidation was supposedly going to lead to a reduction in the number of trading venues, possibly to the extent that activity would become concentrated on just one. We wrote: "There’s no doubt that barriers to entry are rising in forex. To be a top-10 player in the market requires not only expertise and global presence but also good technology."
Five years on it’s apparent that our judgement was both true and false. Technology and a global presence do play a key role in maintaining a position in the top 10. But technology has also allowed the entry of new players to the market – specifically those established to service the increasingly important retail sector – often on a virtual global basis. It has also attracted participants from other asset classes, not all of which are welcome, that have found it easy to access an efficient, transparent and extremely liquid market.