zerohedge.com / by Tyler Durden / Sep 8, 2016 12:53 PM
We previously reported that according to the latest BIS Triennial Central Bank survey, spot FX volumes fell 17% to $1.7 trillion from $2 trillion, the first time volumes have fallen since 2001. The drop was even more acute in the realm of hedge funds and proprietary trading firms, where volumes tumbled by more than 30% over the past three years.
There were various explanations for this: David Mechner, CEO at algo trading firm Pragma Securities, said that “the market has undergone a period of significant change, driven in part by allegations of trader misbehaviour and the subsequent development of a global code of conduct, but also by shifting attitudes within banks to allocate capital as efficiently as possible in light of ongoing regulatory constraints.” JPM added that “the shrinkage in the share of FX trading by these investors is likely the result of regulatory pressures and FX rigging investigations which caused significant retrenchment by FX prop desks.”
In other words, JPM suggested that if one can’t trade a rigged market, one simply does not trade, period.
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