Banks reportedly pulling liquidity from FX markets

EU industry contacts | 2/20/2009 | farlander

[farlander]

I'm active in the FX markets, and, this morning I've got information from a business contact in EU that large banks are pulling liquidity from FX markets. Hotspot, one of the larger liquidity aggregators has taken their site down and is now informing everyone that they no longer provide retail services. Supposedly Currenex is similarly affected.

Does anyone know more about this situation ? Because, if this is true, it means that the credit freeze and counterparty risk/fear is reaching new levels with further reprecussions.

Does anyone have any additional information ?

[bgill]

For the layman, what’s FX, Hotspot, and Currenex?

[saganite]

I’ve seen speculation that there will be a market capitulation today but that’s rumor. Sorry, can’t help.

[randita]

Denninger posted this yesterday:

http://market-ticker.org/archives/801-RED-ALERT-FX-Dislocation-In-Process.html

[autumnraine]

FX is “Foreign Exchange Market” and is where currency trading takes place.

If people are pulling money out, I’d assume they aren’t confident in other countries monetary values and hoarding their own currency.

Not a financial guru and don’t know for sure.

[saganite]

The foreign exchange market (Currency, Forex, or FX) market is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. [1]FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when worldover countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system till 1971.

Today, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements.[2] Since then, the market has continued to grow. According to Euromoney’s annual FX Poll, volumes grew a further 41% between 2007 and 2008.[3]

http://en.wikipedia.org/wiki/Foreign_exchange_market

Currenex, Inc. is based in New York, New York providing a platform for the electronic foreign exchange service industry, including private labels. It was founded in 1999 and focuses on connecting buy and sell sides using the FIX protocol and other application programming interfaces.

Under the terms of an agreement[1] originally announced on January 22, 2007, State Street Corporation acquired Currenex for $564 million on March 5, 2007. Currenex is now an operating division with offices in five locations: New York, New York; Redwood City, California; Chicago, Illinois; Vancouver, Canada; and London, England. New York was the corporate office and remains the principal office for sales, operations, and customer service. Engineering is based out of Redwood City, with developers in Vancouver, New York, and London.

http://en.wikipedia.org/wiki/Currenex

[randita]

http://en.wikipedia.org/wiki/Foreign_exchange_market

[andy58-in-nh]

Haven’t seen anything in Forex yet but expect domestic bank stocks to get pummeled today.

[refermech]

Dow 135 down out of the gate...

[farlander]

FX, or Forex, is short for Foreign Exchange. It is the single largest financial market in the world, with almost 3.5 Trillion transacted daily. It is facilitated by large banks providing liquidity (ie, large amounts available to trade). Currenex and Hotspot are some of the largest liquidity aggregators - they aggregate feeds (bids, asks from large banks) and facilitate trading.

[Hacklehead]

Getting ugly early.

[randita]

Dow 135 down out of the gate...

People covering shorts, maybe?

[org.whodat]

Poor little thing, Try this:http://personalizedpacifiers.com/

[farlander]

Naw, I saw that, that was a non-event. This is more of the same counterparty risk fear. It’s reaching a crescendo in the financial world.

[Porterville]

The best way to beat the dems at their own game is to burn the whole thing down.

What can they tax if no body owns anything?

[farlander]

Cute. But not very helpful.

[demsux]

The best way to beat the dems at their own game is to burn the whole thing down.

Wyatt's Torch

[YOUGOTIT]

The currency markets may be influenced by two or three countries that are going to loan the US dollars. (about 1 or 3 trillion) as I understand that the non tax paying Secretary of the Treasury has told them that we will pay large interest for their funds. (China, Saudi and one other). The eastern Europe banks may have gone out as several in the eastern EU have also. Our Federal Reserve has loaned the banks in the EU and other places between $400 billion and $1 Trillion. These loans were to be payed back in March, However I read this week that they could not and the Federal Reserve moved the payback period to October 2009. This will have a great influence on the FX market as the nations that will loan the money may be out gathering up dollars.

My thoughts only.

[bgill]

Yes, I googled it. Sounds like no one trusts anyone now.

[misterrob]

Options day