Chapter 18

The STP Flow of Foreign Exchange and Money Market Trades

18.1 FOREIGN EXCHANGE

18.1.1 Order placement

Orders may be placed by any of the following means:

  • By researching best bid and offer prices and telephoning a bank direct
  • By researching best bid and offer prices and sending orders through hub and spoke services such as Omgeo Oasys or Autex
  • By using any number of Reuters pre-trade services. Reuters is a major force in FX pre-trade services. Because the world’s major FX market makers publish their prices on its services it is able to act as an electronic money broker, finding competitive quotes. It also provides analytical tools and conversational dealing.
  • By using the services of a money broker. The money broker will aim to provide “best execution” subject to and taking into account the nature of the order, the prices available to the broker in the market and the nature of the market in question. The money broker will charge a fee for its services, which is usually invoiced at the end of the month in which the order was executed. Money brokers offer both telephone-based services and also electronic order entry and matching services. The major force in electronic money broking for foreign exchange is a company called Electronic Broking Services (EBS). EBS was created by a partnership of the world’s largest foreign exchange (FX) market making banks. Approximately USD 145 billion in spot foreign exchange transaction, 700 000 oz in gold and 7 million oz in silver is ...

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