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Last week we had this discussion going regarding the online Forex
trading with market makers.
One of the concerns that we aired - by Hans - was that most
systems were setup in such way that once you tried to deal they could
price away from you when the market went against them or just fill
you when your order went in their favour.
This comment was directed to a company called CMC based near London.
I have spoken today with CMC regarding this issue and asked them
about their practices.
CMC shows in their software a two-way price. You can then try to buy
or sell on these prices. However when the market moves fast away
from their quote they will quote you a new price and give you 10
seconds to either deal or not deal on this.
The temptation is of course for the dealer to just fill you when the
price has moved in his favour and not to give you a better price.
They told me of course that if they did that then they would not have
any customers. Furthermore they told me that very often they let
their clients deal even when it was not in CMC's favour.
The interesting part is that CMC offers as well the service of
offering firm two-way prices on the PHONE.. (You can deal on those
prices.)
AND after talking to their dealer it turns out suddenly they CAN make
two ways prices with their software as well. However this option is
not switched on for most clients.
It works like this: You type in the size you want to deal and they
make you the price spread. You then have some seconds to hit either
side and the trade stands.
This is basically the same setup as if one was dealing on the phone.
However if one wants to have this option you need to talk to their
chief dealer.
The only question which remains is when are we able to deal on EBS
with triple A counterparties.......
BTW: EBS prices should be available on Reuter and Bridge, Telerate
from September onwards
Gerrit Jacobsen
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