Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209986 
Year of Publication: 
2011
Series/Report no.: 
Working Paper No. 2011/10
Publisher: 
Norges Bank, Oslo
Abstract: 
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.
Subjects: 
exchange rates
algorithmic trading
market microstructure
electronic trading
high frequency trading
JEL: 
F31
G12
G15
C42
C82
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-616-5
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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