How to navigate fragmented NDF liquidity

Liquidity consumers need to embrace dialogue with their LPs as an integral part of the liquidity curation process, argue HSBC execs

Fragmented-market

The fragmentation of non-deliverable forward (NDF) liquidity has created an opportunity for trading desks to optimise the liquidity pools they face. The rise of last look liquidity across a number of electronic communication networks (ECNs) has created the illusion of deep liquidity, but the reality is the liquidity provision incorporates trade validation through last look, which in return creates a liquidity mirage. Enhanced fragmentation has driven down the minimum spread increment in NDFs

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