[jldugger]

I remember reading that piece, and now with this one, it's hard to tell if the guy is just that sarcastic, or honestly attempting to defend the practices of the accused. "Listen guys, it sounds bad, but actually this is just how trading is. Why heck, if the trading desk isn't out to bend their customers over, they might even take a loss!"

Not sure why I'd expect any better of a trade rag I suppose.

[smallnamespace]

His basic point is that even though the facts of this case look bad, at the end of the day even normal FX execution will like front running just because of the structure of the market.

[chii]

why would any legitimate buyer of currency go with someone who might try to frontrun them?

Why isn't there a way for buyers to pay a set amount in fees for the transaction, in order to guarentee that they don't get boned in the back by their very own agents?

[smallnamespace]

> why would any legitimate buyer of currency go with someone who might try to frontrun them?

Because paradoxically it's often cheaper to do it this way than alternate routes of execution.

For example, you can (for a fee) get set up with a trading terminal and just execute against an FX exchange yourself. However, you might end up paying more for that execution that if you went to a bank, especially if you don't know what you're doing.

In theory, the bank knows the market well and can execute your order at a better price (by 'working' your order, splitting up and not tipping off the market), and then passes off some of those savings to the client.

Whether that actually happens in practice depends on the client being savvy enough about the market to not agree to a bad execution strategy (as we saw here) or not agreeing to a bad price.

[princeb]

i have never been in fx but this is what I heard:

these kind of clients

1. don't want to pay fees

2. don't want any risk

3. just want a single publicly available price (the WMR fix) to simplify accounting (fx, financial, mgmt, risk and all the disparate ERP systems that a company can be hooked up to)

so the whole market is set up this way.

oh... the e-brokerages like hotspot or whatever would drool buckets at the prospect of global corporates going direct to market rather than through the dealers, but all these companies have decided to cede control to the banks because they don't want to deal with any of the difficulty of fx execution. and so you have this.