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Financial Planning > Behavioral Finance

Online Foreign Exchange Trading Is on the Rise

By Staff Writer

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GREENWICH, Conn. (HedgeWorld.com)–According to research done by Greenwich Associates, one quarter of the world’s corporate and financial institutions are trading foreign exchange instruments online.

Greenwich conducted interviews at the end of 2002 with treasurers, assistant treasurers and other financial professionals at more than 2,700 corporate and financial institutions that each trade US$250 million or more annually.

Volume in 2002 increased to 32% of the total trading volume from 26% the year before. Greenwich officials estimate that it will grow to 40% by 2003.

Researchers discovered that online forex trading is most prevalent in the United States, where 40% of institutions trade electronically, up from 27% in 2001. Strong growth also has occurred in continental Europe and Australia/New Zealand, where around 30% of institutions are trading online.

Recently, three foreign exchange prime brokers teamed up to use software to automate the cumbersome task of assigning client trades to the proper forex bank. J.P. Morgan Chase & Co., New York, Deutsche Bank, New York, and AIG Trading Group Inc., Greenwich, Conn., helped design and are using a forex trading system by Traiana Inc. The system, called Traiana Harmony, allows participating banks to assign electronically placement of foreign exchange trades Previous HedgeWorld Story.

When interviewed on straight-through processing, only 14% of institutions said they used STP in 2002, which is up from 13% the year before. The proportion of those saying they do not plan to use STP fell in 2002 to 59% from 69% in 2001.

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