How do Market Makers actually work?

[Micke256]

Thanks for helping us out Currencia, now we know how it looks like

Best regards, Micke

[currencia]

Come Fall, we shall see what they do with it. Sounds like it is to be a new wholesale house for marketmakers. So, competition for REFCO and other smaller banks.

I guess EBS didnt like any upstarts like FxAll coming around.

I can see why Mayor Bloomberg has done so well with himself.

He'll probably run for President one one of the next two terms, the way he is going.

[Micke256]

EBS say that $90 billion / day is conducted over their platform.
Where is the other cash goin, as already 1999 the transactions was in the 1.5 trillion range ???? If this is true, it sounds funny. They are the biggest on the market, still only got 6 % market share?????

Or did I miss something now?

[rezo_s]

Originally posted by Micke256
EBS say that $90 billion / day is conducted over their platform.
Where is the other cash goin, as already 1999 the transactions was in the 1.5 trillion range ???? If this is true, it sounds funny. They are the biggest on the market, still only got 6 % market share?????

Or did I miss something now?

Yeah, indeed. If thats what they claim, whaere is the rest coming from? Is it really only 90 bil? Hmmmm. Everyone is familiar with1.5 tr figure ! So does anyone know? Hakan?

[currencia]

that number of 1.6 trio is over four years old.

[Hakan]

Hi mate,

I am sorry for coming back late. it's been a very busy day.
I will go through your questions one by one;

-Not really. When the market touches a lvl where your limit order is, that order shd be filled. Only occasions when u dont get your
fill in full amnt wud be because of liquidity. But really, stuff like that happens only in big sizes. If your order for a few usd's or eur's etc no questions abt liquidity unless its 50 or 100, 200 mios something.
-Well, banks generally do delivery based on gross lines between
each other and some do netted off cash delivery in ccy pairs etc.. However, smaller scaled banks can have margin or
netting accounts. The leverage would depend on the institution
appitate in the business, can be anything from 2-5 pct (of course
one shd also take the ccy pairs traded into account).
-If there is a margin a/c, generally, the call wud be made when the a/c valuation touches below the margin rate and if touches, lets say 0.5 pct or something, the positions will be closed. In the meantime while there is a call, one can only cut positions not add on. But the margin lvls and cut off lvls etc wud depend from house to house.
-Well, I shd say yes. Techically speaking, if you are a banks customer, you can trade with them. You can hv a trading facility
through 'the corporate desk'. Though the spot desk and the corporate desk are two different worlds. You wud generally not
hv an access to the spot desk, only through the corporate guys(mostly sharks!!). Basically, the speed and the quaility pricing
would suffer, plus perhaps access to the timely market information as well. I can only guess, because every house is different, but I assume that one shd trade in min 1 to 5 mio's
with a reasonable deposit. 1 mio unit is considered to be a min marketable amount. The regular sizes 10 mio's in majors.

I hope that the abv wud be helpfull. It is simple and straight forward really. Also regarding your question about EBS, I am actually very suprised to hear that EBS claims to do only abt 90 bio a day. I do not really know the statistics, but the amount sounds a bit less. I wud hv assumed they did more than that.
Really most of the banks wud use EBS as their prime liquidity source, of course as well as voice brokers, Reuters 2002 etc..but really EBS is the king amongs them. Like we do abt anything from
1 to 2 yds a day and more or less everything we do with banks goes through EBS ( also known as 'the toy'). It is only us
doing that much, so really I am suprised to see. I can ask my buddies in EBS and try to find out a figure perhaps.

Anyway, if you have any more questions, please feel free mate.
I also hope that the market has been treating well......

Hv a good one..

Hakan

[ifsclusa]

The info that was given about EBS charging pips and having set spreads is not correct. It is essentially an ECN and the cost is $25 per mio for the aggressor. That all being said no-one here can get it. EBS has comeout with a new product that is really there to try to eliminate Reuters (very high cost to banks) with it they have come up with a pricing tool for non-EBS companies that use reuters, but you still deal with who your credit lines are with. Just like when EBS came out the first time it is only a tool for the banks to save money (EBS cut broker costs significantly). The whole thing is a mute point unless you are going to start a trading desk and if you are not a good idea to get info from a chat, because some info is not correct.

[rezo_s]

Good Day, Hakan. Thank you very much for the input. I apriciate. In case you talk to ppl from "the toy" and have something new to add - it'll be interesting.
Regarding the volumes, I have been looking around my archives and found somrthing on it - this is something I saved last year. This is a bit of help. I dont know exactly what is EBS's area, but its still possible (90 bill) i mean. The reason may be simple - they are only in spot market field. I dont know whats their field exactly. And the fact that global currency market is devided (I've been posting this indoemation on devision of market in some other post, but I will repeat)
to :
- spot
- forward
- swap
- other oparations
The data we have right now is not upto date. And when someone is pointing out 1.5 trill, the data may be only of october 2001, as thats the latest press release out there. This data (and other statistics on currency and financial direvatives markets) is released by national central banks once in every 3 years. The coordination is made BIS, which is empowered by G10. Last release of 2001 was based on data provided by 48 central banks and monitory authorities.
According to that vary release, volumes on forex market were increasing till 1998 (thats where we had 1.5 figure) and in 2001 - reduced. The fall in volumes occured after the asian crysis. And the main sector of market where the fall occured was the spot market - take a look 570 bil in 1998, and fell to 390 bill in latest report. So the latest tendency back than was - volumes on spot reducing.
I think this is some lite on what we're talking about. In case EBS is at spot market mainly - in that case they have more than 23%of the spot market share(and maybe more - in case volumes reduced more since 2001; 23% is according to latest 390bil figure). And lets not forget reuters, fxall, central banks, and other unions...so 90 bil in that case seems reasonable. But in case EBS is not mainly on spot - it still doesnt make scence. I'm attuching the main topic we're interested in - volumes table: