Perhaps there is someone that can answer a question that has had me thinking for a couple of days:
On a wholesale desk, are the orderbooks of various ECN's combined (in house) to give one book that represented all of the major liquidity pools?
For example, if one needed to buy $20m USD/JPY spot (an example plucked out of the air), a single order could be placed. Then this could be split up into tranches of various sizes, and routed to the different ECN's - say $10m through EBS, $5m through currenex and $5m through Hotspot - each order size determined by the current bid sizes and time in force of orders on the individual orderbooks?
The only problem I can think of is if the ECN's have different creditworthiness, but I doubt this is the case. Perhaps the smaller tick size of hotspot might cause a slight problem, but surely there are very smart IT guys that can get around this?
Would it not be an advantage to be able to look at one orderbook that represented all of the FX community, rather than half a dozen orderbooks for the same population of desks? Just a thought.
On a wholesale desk, are the orderbooks of various ECN's combined (in house) to give one book that represented all of the major liquidity pools?
For example, if one needed to buy $20m USD/JPY spot (an example plucked out of the air), a single order could be placed. Then this could be split up into tranches of various sizes, and routed to the different ECN's - say $10m through EBS, $5m through currenex and $5m through Hotspot - each order size determined by the current bid sizes and time in force of orders on the individual orderbooks?
The only problem I can think of is if the ECN's have different creditworthiness, but I doubt this is the case. Perhaps the smaller tick size of hotspot might cause a slight problem, but surely there are very smart IT guys that can get around this?
Would it not be an advantage to be able to look at one orderbook that represented all of the FX community, rather than half a dozen orderbooks for the same population of desks? Just a thought.
