| Foreign exchange market braces for rise of algorithms
CHICAGO (Reuters) - Global investors using complex, computer-driven models will increasingly pump up the foreign exchange market's volume, creating both opportunities and headaches for market makers. In algorithmic trading, hyper-fast computer programs based on mathematical models essentially make split-second financial decisions to find optimal prices. With hedge funds and other high-frequency investors gravitating to so-called algos, the programs are already helping to keep trading volume robust even as volatility in the currency markets generally declines, according to panelists at an industry conference sponsored by FX Week magazine this week. "The barriers to entering this market have decreased, yet how does one on the buy side or the sell side manage liquidity when it is spread across so many different venues," said Darren Jer, regional FX sales manager with ICAP.
Reuters, CME Team Up To Open Spot Currency Exchange
This morning Reuters and the Chicago Mercantile Exchange announced the official opening of FXMarketSpace, allowing for anonymous trading in spot foreign exchange against the dollar on the euro, yen, sterling, Australian dollar, Swiss franc, Canadian dollar as well as four cross-currency pairs. The companies are claiming that although the exchange just opened, customer numbers are already "significantly ahead of expectations." Reuters is using its know-how to provide trading access, trade notification and market data with the CME is bringing clearing and trade matching services to the mix. Each company has 50% ownership. The global market for ForEx trading currently stands at greater than $2 trillion a day and many analysts predict that number could cross $3 trillion by year's end. The companies expect the exchange will be profitable by 2008.
Flexibility for private sector in forex dealings
KUALA LUMPUR: The further liberalisation of Malaysias foreign exchange administration policies will give the private sector more flexibility in managing foreign exchange transactions, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said. She said although the trading market would be affected by the inflow and outflow of funds, Malaysia would be able to absorb any outflow, given the countrys high reserves. Given a very high level of reserves, we can certainly absorb the outflow and over time, we project significant inflows continuing with export growth estimated at 8% to 9%, she told reporters after the launch of Bank Negaras Annual Report 2006 and the inaugural issue of its Financial Stability and Payment Systems Report 2006 yesterday. Zeti said the inflow of foreign direct investment (FDI) remained significant to date, with the central bank expecting inflows of portfolio funds amidst a positive outlook for the economy. On the relaxation on forex rules, she said the financial sector had always been seen as an enabler of growth in facilitating financing for the private sector. Zeti said liberalisation had, in fact, generated new business opportunities for domestic players, adding that players could issue foreign currency bonds and take part in the property sector more sensibly. On whether the liberalisation was a process towards allowing the ringgit to be traded offshore, she said the central bank would assess the risks and benefits of such a move. These latest changes are quite significant and we will consider other liberalisation (moves) going forward.
'Currency spot market a must to turn Mumbai into global center'
New Delhi: If Mumbai has to become an international financial centre, the government would have to allow foreign investments in government securities, create a currency spot market and set up an exchange for trading in currency derivatives. In a report on `Making Mumbai an International Financial Centre', a high-powered Expert Committee set up by the Government also suggested that foreign clients be allowed to buy unlimited rupee-denominated corporate bonds and those issued by sub-sovereign entities such as States and metropolitan administrations. The report which has been submitted to the finance minister P Chidambaram, also said that the internationalisation of the rupee-denominated bonds would accelerate the emergence of Indian international financial centre (IFC) on the world stage.
Mexico's Currency Rallies After Fitch Increases Credit Outlook
March 29 (Bloomberg) -- Mexico's peso rallied after Fitch Ratings raised the country's debt outlook to positive from stable. The peso rose the most in a week after the rating firm cited the approval of a pension bill, the country's reduction in foreign debt and a balanced budget as reasons for raising Mexico's outlook. A report showing the U.S. economy grew at the end of 2006 at a faster pace than previously estimated, blunting the possibility of slowing Mexican exports, earlier bolstered the currency. The peso rose 0.5 percent to 11.0278 per dollar today and headed for its first monthly gain since December. Mexico's peso has risen 1.2 percent against the dollar this month after weakening 3.3 percent in the first two months of the year. The peso was pushed higher ``after Fitch's change of outlook,'' wrote Francisco Diez, head of emerging-market foreign exchange trading at RBC Capital Markets in Toronto.
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