Trading relationships in FX derivatives: lessons from Credit Suisse’s collapse

Gerardo Ferrera and Helene Hall
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Gerardo Ferrera: Bank of England
Helene Hall: Harvard Business School

No 1154, Bank of England Staff Working Paper series from Bank of England

Abstract: Using granular transaction-level data, this paper investigates the characteristics and implications of dealer-client trading relationships in the over-the-counter FX derivatives market. We first document that dealer-client trading relationships are persistent over time. Then, to shed light on the role of relationship strength for client access to these instruments during times of dealer stress, we examine the collapse of Credit Suisse in March 2023. In this episode, although Credit Suisse’s EURUSD notional traded and trade count declined sharply, clients who had previously relied less heavily on Credit Suisse did not differentially reduce their Credit Suisse-specific trading activity relative to more reliant clients. Instead, clients who had previously relied more heavily on the bank were able to substitute to other existing dealer relationships without incurring additional costs. Overall, these findings suggest that search and bargaining frictions were not particularly costly for heavily reliant clients afte

Keywords: Foreign exchange; derivatives; trading relationships (search for similar items in EconPapers)
JEL-codes: G12 G14 G15 (search for similar items in EconPapers)
Pages: 85
Date: 2025-11-14
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:023276

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