FX markets have come a long way. In the late 1980s and 1990s, the market resembled Stonehenge in that a few silos dominated the landscape. They were, in fact, the market. It was a very static affair with high barriers of entry and almost no difference in what the few banks offered. Today’s market looks more like our solar system’s asteroid belt. There are thousands of market participants that come in all shapes and sizes. They are independent but connected entities. Barriers to entry are low. As a result, the entire market is in a state of flux which fosters innovation. Customers have many choices and competition is strong.
The original banks are still around. I liken them to the planets; a small number of larger entities that still dominate the area around them but exert much less influence on the market at large. In FX, like in other markets before it, a number of forces came together to affect this change. Continue reading From Stonehenge to the Asteroid belt or How FX Markets Have Changed