Citations (3)



Foreign Exchange Market Structure, Players and Evolution

Michael R. King

Ivey Business School

Carol L. Osler

Brandeis University - International Business School

Dagfinn Rime

BI Norwegian Business School

August 14, 2011

Norges Bank Working Paper No. 2011/10

Electronic trading has transformed foreign exchange markets over the past decade, and the pace of innovation only accelerates. This formerly opaque market is now fairly transparent and transaction costs are only a fraction of their former level. Entirely new agents have joined the fray, including retail and high-frequency traders, while foreign exchange trading volumes have tripled. Market concentration among dealers has risen reflecting the heavy investments in technology. Undeterred, some new non-bank market participants have begun to make markets, challenging the traditional foreign exchange dealers on their own turf. This paper outlines the players in this market and the structure of their interactions. It also presents new evidence on how that structure has changed over the past two decades. Throughout, it highlights issues relevant to exchange rate modelling.

Number of Pages in PDF File: 47

Keywords: Exchange rates, algorithmic trading, market microstructure, electronic trading, high frequency trading

JEL Classification: F31, G12, G15, C42, C82

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Date posted: September 30, 2011  

Suggested Citation

King, Michael R. and Osler, Carol L. and Rime, Dagfinn, Foreign Exchange Market Structure, Players and Evolution (August 14, 2011). Norges Bank Working Paper No. 2011/10. Available at SSRN: https://ssrn.com/abstract=1935858 or http://dx.doi.org/10.2139/ssrn.1935858

Contact Information

Michael Robert King
Ivey Business School ( email )
Western University
1255 Western Road
London, Ontario N6G 0N1
519 661 3084 (Phone)
HOME PAGE: http://www.ivey.uwo.ca/faculty/directory/michael-king/
Carol L. Osler
Brandeis University - International Business School ( email )
Mailstop 32
Waltham, MA 02454-9110
United States
781-736-4826 (Phone)
Dagfinn Rime (Contact Author)
BI Norwegian Business School ( email )
Nydalsveien 37
Oslo, 0442
+47-46410507 (Phone)
HOME PAGE: http://home.bi.no/dagfinn.rime/
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