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


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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Outlook for e-FX: opportunities and risks for banks

As electronification spreads into new areas of FX trading, banks are under pressure to digitise more of their offerings to remain competitive. The race is now on to automate pricing, trading and hedging in areas such as non-deliverable forwards, swaps…

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