Forex trading risks "on the rise"
NEW YORK – The rapid expansion of retail aggregators (RAs) and prime brokerage in foreign exchange (FX) trading has raised significant new op risks that market participants must mitigate, according to the Foreign Exchange Committee, an industry group of major financial institutions engaged in foreign currency trading in the US.
In its mid-December 2005 guidance, released to the FX market participants, the Committee warned of risks inherent in the model, and provided best-practice recommendations.
FX prime brokerage allows an institutional client to source liquidity from a variety of executing dealers while maintaining a credit relationship and settling with a single entity – the prime broker. The model allows customers to
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