Why not a central Forex exchange? | Forex Factory

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Why not a central Forex exchange?

  • #1
  • First Post: Sep 23, 2008 1:55am Sep 23, 2008 1:55am
I have been away from Forex for a few years now and the same broker problem seems to be still here. The only choice is stop hunting market makers vs low liquidity ecn's.

What has stopped 4-5 bigger ecn's setting up a central clearing firm?

Compare Forex to the the e-mini future contracts in the US, great fills, lots of volume, and lots of future brokers competing. Trades cost about $5 per round turn.

Why can't we have something like this for Forex? A Forex exchange in London or NY would be the perfect place to set this up.
  • #2
  • Sep 23, 2008 2:12pm Sep 23, 2008 2:12pm
Probably because a lot of people (brokers) are getting very rich off of manipulated spreads, trading against clients, etc. If there was a central exchange, they would be limited to making money only by commissions which is not enough for these gready bastards.
  • #3
  • Sep 23, 2008 6:48pm Sep 23, 2008 6:48pm
Quoting agisthos
I have been away from Forex for a few years now and the same broker problem seems to be still here. The only choice is stop hunting market makers vs low liquidity ecn's.

What has stopped 4-5 bigger ecn's setting up a central clearing firm?

Compare Forex to the the e-mini future contracts in the US, great fills, lots of volume, and lots of future brokers competing. Trades cost about $5 per round turn.

Why can't we have something like this for Forex? A Forex exchange in London or NY would be the perfect place to set this up.
FX has worked perfectly and grown substantially without bureaucrats.
We dont need someone like you are suggesting to stuff it up.
  • #4
  • Sep 23, 2008 10:47pm Sep 23, 2008 10:47pm
  •  onu
  • | Joined Feb 2006 | Status: superior senior member | 746 Posts
Quoting lasty
FX has worked perfectly and grown substantially without bureaucrats.
We dont need someone like you are suggesting to stuff it up.
what a BS You have no clue what you talking about...

this is one of the most fraudolent and manipulated markets ever
  • #5
  • Sep 24, 2008 1:05am Sep 24, 2008 1:05am
A lofty idea indeed. How would Japan feel about how its currency is traded and under what conditions with a centralized market in another country?
I am sure Israel may have some reservations about a regional exchange set up in the UAE.

We are talking currencies here which are underwritten by governments. It seems too much politics for me to try and centralize anywhere..but maybe Switzerland...oh..and we all know how forthright and above board all Swiss FX brokers are..so it makes perfect sense. hehe

The US is the most overregulated market on earth...much good the SEC regulation did the banking sector there.

Forex is a relatively safe and stable market for the educated and those that can effectively manage their cash.

On the other hand...all brokers/banks out there lure in retail clients with the magic of leverage...the retail clients like a mob of lemmings run towards that greed motivation and hop off that cliff...mistakenly thinking they are flying instead of falling.

Its not really a matter of fraud...its a matter of mass ignorance meeting those who are willing to trade against it and win.

No matter how hard nations try they cannot regulate stupidity!
  • #6
  • Sep 24, 2008 1:27am Sep 24, 2008 1:27am
Yes but it works,,,, for your broker anyways

Quoting onu

this is one of the most fraudolent and manipulated markets ever
It's me...
  • #7
  • Sep 24, 2008 1:34am Sep 24, 2008 1:34am
Quoting krigere

Its not really a matter of fraud...its a matter of mass ignorance meeting those who are willing to trade against it and win.

No matter how hard nations try they cannot regulate stupidity!



A fool and his money.......
  • #8
  • Sep 24, 2008 2:10am Sep 24, 2008 2:10am
Agree with krigere here. Besides whats the need for another exchange and more middle men in the trade to collect commissions and fees for doing nothing? Leave it like it is now, its the best trading environment out there.
  • #9
  • Sep 24, 2008 3:15am Sep 24, 2008 3:15am
Quoting lasty
FX has worked perfectly and grown substantially without bureaucrats.
We dont need someone like you are suggesting to stuff it up.
I will be more clear. I hate government meddling more than the next person.

I do not mean for a regulated forex exchange to replace what we have. The market makers and dealing desks can still exist. They have every right to.
But if there was to be a central exchange with multiple ecn's, then those dealing desks will go out of business as the retail customers gravitate to trading a market with real liquidity and the least spread manipulation.
  • #10
  • Sep 24, 2008 5:56am Sep 24, 2008 5:56am
  •  onu
  • | Joined Feb 2006 | Status: superior senior member | 746 Posts
"Its not really a matter of fraud..."

it is a matter of fraud, already forgoten refco and FXLQ??? These cases are one of the reasons of the ugly reputation of FOREX

Realizing agisthos idea would be great, more transparency from the brokerside and less room for fraudsters.
  • #11
  • Sep 24, 2008 6:24am Sep 24, 2008 6:24am
Quoting agisthos
I have been away from Forex for a few years now and the same broker problem seems to be still here. The only choice is stop hunting market makers vs low liquidity ecn's.

What has stopped 4-5 bigger ecn's setting up a central clearing firm?

Compare Forex to the the e-mini future contracts in the US, great fills, lots of volume, and lots of future brokers competing. Trades cost about $5 per round turn.

Why can't we have something like this for Forex? A Forex exchange in London or NY would be the perfect place to set this up.
This is what makes FX so great.

If we did not have margin FX with all the nasty dealing desks very few of us retail traders would ever be able to trade FX. It's this massive competition between brokers that keeps this whole industry growing in the way it is.

Who ever heard of a discount ECN broker in 2002?

Besides there is already a exchange to trade currencies, FUTURES!

if u want a currency exchange go trade futures.................
  • #12
  • Sep 24, 2008 7:30am Sep 24, 2008 7:30am
Quoting onu
"Its not really a matter of fraud..."

it is a matter of fraud, already forgoten refco and FXLQ??? These cases are one of the reasons of the ugly reputation of FOREX

Realizing agisthos idea would be great, more transparency from the brokerside and less room for fraudsters.
You will find massive fraud occuring on regulated markets as well. I remember Molly from ML in Seattle...she fleeced her clients for hundreds of thousands and she was trading regulated products. Look what the FBI is doing in terms of examing financial insitutions whose primary products were regulated.

Its one thing to regulate the participants who play in the FX market on a country by country bases. Its completely another thing to try and regulate the market itself. HOW WOULD YOU DO IT????...ITS A GLOBAL MARKET...

If you over regulate in the US or overtax as is the case of Germany now...clients will simply leave and enter through other markets.

For example, many US clients want to trade CFDs...they cant in the US so they open off shore accounts so they can....Based in Europe as an American I can trade the major indices up to 40 times leverage if I wanted to (not that I would) . What in the US you can Margin in 50%?

We know how great the UN functions...gee..do we really need another institution full of crats who fail to pay their parking tickets?
  • #13
  • Sep 24, 2008 10:16am Sep 24, 2008 10:16am
Quoting agisthos
I have been away from Forex for a few years now and the same broker problem seems to be still here. The only choice is stop hunting market makers vs low liquidity ecn's.

What has stopped 4-5 bigger ecn's setting up a central clearing firm?

Compare Forex to the the e-mini future contracts in the US, great fills, lots of volume, and lots of future brokers competing. Trades cost about $5 per round turn.

Why can't we have something like this for Forex? A Forex exchange in London or NY would be the perfect place to set this up.
Whats all the whining about? You can trade FX futures on CME if you prefer that just like the emini index futures. Thats just the central counterparty model with a clearing house and associated regulatory and exchange fees you want. Execution in the majors is efficient enough.

Low liquidity ECNs? You can transact north of 50 mio if you need/can - whats your problem?

90% of the stophunting posts in this forum are from people who apparently dont even grasp the concept of bid/ask-spreads, or the fact that sometimes off-market ticks get through and deals on them get undone (yes, there are also trades in futures that get undone on a fairly routine basis). I wouldn't pay too much attention to those posts, or at least research the allegations yourself.
  • #14
  • Sep 25, 2008 3:05am Sep 25, 2008 3:05am
I post a thread asking what people think about having multiple ecn's through a central exchange, and that is "whining" eh shrike? Grow up and do not be so rude
  • #15
  • Sep 25, 2008 7:19am Sep 25, 2008 7:19am
  •  onu
  • | Joined Feb 2006 | Status: superior senior member | 746 Posts
Quoting agisthos
I post a thread asking what people think about having multiple ecn's through a central exchange, and that is "whining" eh shrike? Grow up and do not be so rude
u are absolutely right. Minds are like parachutes... they work best when open
  • #16
  • Sep 25, 2008 7:29am Sep 25, 2008 7:29am
Quoting onu
u are absolutely right. Minds are like parachutes... they work best when open
fantastic quote!
  • #17
  • Sep 25, 2008 8:51am Sep 25, 2008 8:51am
You said the only choice were 'stop hunting market makers vs low liquidity ecn's' - which simply isn't true. That's whining in my book. However, there are providers who combine multiple ecns into one platform (google vCap Futures) - unfortunately minimums are extremely high and its not available to private customers.
  • #18
  • Sep 25, 2008 10:31am Sep 25, 2008 10:31am
Quoting agisthos
I post a thread asking what people think about having multiple ecn's through a central exchange, and that is "whining" eh shrike? Grow up and do not be so rude
Can you seriously see a group of ECNs being able to agree with each other in such a cut throat business? They would sooner murder each other's CEOs
  • #19
  • Sep 25, 2008 5:38pm Sep 25, 2008 5:38pm
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  • #20
  • Sep 26, 2008 2:56am Sep 26, 2008 2:56am
Quoting shrike
You said the only choice were 'stop hunting market makers vs low liquidity ecn's' - which simply isn't true. That's whining in my book. However, there are providers who combine multiple ecns into one platform (google vCap Futures) - unfortunately minimums are extremely high and its not available to private customers.
Okay you are right, it was an unfair stereotype.

I am thinking of pairs such as GBP/JPY and GBP/CHF which I like to trade. They consistantly have a spread of 7-10 pips on either ECN or dealing desk. Useless for scalping. If there was to be mutiple ECN's adding to a larger liquidity pool im sure this spread would drop, and on other pairs as well.

When I log into my futures account I can see the e-mini S&P bid/ask barely 1-2 ticks apart. I can see trades of 400 contracts at a time and they get filled.

Yet FOREX, which supposedly has WAY more liquidity than futures, has wide ECN spreads on almost every pair except EUR/USD. Despite all the talk, this is a sure sign of either low liquidity or ECN spread manipulation (which supposedly does not happen).
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