Institutional Forex Trading
The Forex market includes many categories of participants, such as central banks, commercial banks, large corporations, retail traders, and institutional traders.
When we refer to institutional traders, we mean interbank traders like banks and large investment firms. Institutional traders enjoy several advantages over retail traders, including lower trading costs (spreads) and sometimes better access to information.
Institutional Forex Trading Features
These are some of the special features of institutional Forex trading:
(1) Liquidity directly from Tier-Banks and Proprietary Trading Firms
(2) Best Rates Identification Mechanism
(3) Open order book / Full market depth
(2) Complete anonymity
(3) Low-latency order-execution
(4) The existence of complicated orders
(5) Pre-trade and post-trade transparency
(6) Fast Execution (High-Frequency Trading and low-latency order processing)
Institutional Forex Platforms
Institutional Forex trading platforms include MT4, Thomson Reuters, Barclays BARX, Orex, and others. These platforms offer a fully customizable interface, integrated advanced charting, and sophisticated order execution capabilities.
(1) Barclays BARX
(2) Thomson Reuters Fx Matching
Orders Execution and Latency
Execution speed is a top priority for institutional Forex traders. Brokers targeting institutional clients invest millions of US dollars in developing ultra-low-latency solutions.
Low-latency requires:
(i) State-of-the-art technology
(ii) Physical location close to a major exchange
The maximum speed of execution is very important for arbitrage or news-trading strategies.
The Role of Liquidity
Institutional traders have access to larger liquidity pools than typical retail traders. This increased liquidity results in tighter spreads, thereby reducing trading costs. These lower spreads are particularly important for scalping strategies.
The Biggest Institutional Traders -Euromoney Foreign Exchange Survey
According to the latest Euromoney annual survey, Citigroup remains at the top. Other major players include Deutsche Bank, UBS, Barclays, and JP Morgan.
Chart: The Greatest Institutional Forex Players (2010-2016)
Note:
(1) The Euromoney Fx survey was first launched in 1976 and it is considered a key benchmark for the global Foreign Exchange industry
(2) The Euromoney FX survey is based on data collected from client votes and trading volumes reported by major banks.
More on Euromoney: http://www.euromoney.com/Article/3554914/FX-Survey-2016-Results-index.html
◙ Institutional Forex Trading
OnlineForex.biz (c)
