Any possibility of centralized spot forex?

Quote from icebergorder:

Yip of course you are right the banks dont want it..and they will try to do everything they can to delay the process..even DB are stepping into the retail world just recently!

We need a centralized clearer before we can really move to an exchange model...each of the platforms have a quasi centralized clearing method...Icap buying EBS allows EBS to push harder into the space of online trading..the price they sold for however may suggest the banks are still tied into it for a while OR it may be the price they had to pay to be allowed to open it up freely to the market place.....tbh I think the larger banks are kidding themselves if they think they can do without the network of smaller clients and banks for their liquidity...yes Lava came out and said they will now become the closed network for the large banks...fine..the hedge funds are taking the place of many banks as liquidity providers...EBS sale opens up the opportunity for them to begin to push for more open exchange model...would be nice to turn around to those banks that try to close everyone else out and tell them to poke it....
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Yes, looks like the Lava product will also target hedge funds but has a "hidden" facility so that the banks can trade between themselves!
 
Why don't large banks want open market?

What is the significant gain from trading between themselves?

Thanks insiders in advance,

I am learning a lot here...
 
Quote from jm73:

Why don't large banks want open market?

What is the significant gain from trading between themselves?

Thanks insiders in advance,

I am learning a lot here...
More...

I guess they gain from trading with the retail clients at prices that are better for the bank than interbank prices. If interbank opens for retail, clients will go to the market and get the best prices rather than going to a single bank (or group of banks that post prices on a retail platform like IB IDEALPRO) and get a price which includes the bank's commision.
 
Why dont banks want open market..

liquidity/spread/money making...banks dont want clients to be knowledable about where the fx market rates are because that means they cant take a spread...remove the ability for a forex desk to take spreads and they lose the ability to make money...that means they have to go back to the old days and actually take positions in the FX markets based on knowldedge and feel, rather than front running...

Whats the advantage to trade amongst themselves.....one is impact on rate...if you have $400mio eur.usd to sell and can match it off without market slippage then you save money...

Also it makes the rest of the fx market think they are missing something if all this liquidity is apparently being traded between the top 5 banks..btw as we all begin to trade with each other what will they have left to cover between themselves? just their own prop ..and will they want to give that info out to their competitors by trading with them...I doubt it...
 
The purpose of a centralized currency exchange is not just liquidity.

It is regulatory power and a credible threat (and actual pursuit) of international criminal prosecution for cheating.

The facts that the banks really don't want it sounds like a great reason there needs to be one.

I'm also sure that banks really don't want regulatory control and independent valuation of bank reserves and loan quality, but we have it, fortunately.
 
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