Speediest Traders Becoming Less Welcome in Currency Markets
- Aggressive, short-term arbitrage strategies are ‘saturated’
- Speed bumps may have thwarted some types of fast trading
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The most aggressive high-frequency currency traders are showing signs of losing steam, suggesting platforms have succeeded at thwarting some speedy strategies.
Electronic specialists are making waves by eclipsing major banks in foreign-exchange trading. But some strategies -- focused on fast execution and short-term arbitrage -- have reached a “saturation point,” according to the Bank for International Settlements. At the same time, platforms have adopted so-called speed bumps to blunt advantages of the savviest firms, which have been blamed for sniffing out trader intentions to bet against them.