Traders prepare for HFT shift into emerging markets

images (6)Better infrastructure and deeper liquidity is attracting high-frequency traders to exploit EM currencies, say traders and technology providers

The effects of high-frequency trading (HFT) on developed foreign exchange markets have been well-documented in recent years, but signs of HFT are now also beginning to appear in emerging markets as improving infrastructure and liquidity attracts  high-frequency players as a viable alternative to G-10 currencies, where increased regulation and compressed spreads have made it tougher to generate returns.

“We’ve seen a couple of machines being turned on in spot offshore renminbi (CNH) – we notice it because generally speaking with something like the Chinese currency we deal in five-pip increments, but the machines will put in a deal in one-pip increments. We’ve seen a bit of that on USD/CNH,” says the head of emerging markets trading at one European bank.

Other traders have also noticed similar changes; as liquidity increases in certain emerging currency pairs, there has been a corresponding rise in algorithmic trading and shorter-term, higher-frequency models, says Eugenia Hanoune, head of FX electronic commerce for Europe, the Middle East and Africa at Citi in London.

Read More 

Advertisements
This entry was posted in Articles, Finance, High Frequency Trading, high-frequency journalism, Useful Links and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s