Electronic Foreign Exchange Trading (e-FX): Developments in and implications for the Tokyo FX Market

Fuyuko Onishi, Yuichiro Hirai, Ryo Aruga and Hidemi Bessho
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Fuyuko Onishi: Bank of Japan
Yuichiro Hirai: Bank of Japan
Ryo Aruga: Bank of Japan
Hidemi Bessho: Bank of Japan

No 25-E-4, Bank of Japan Review Series from Bank of Japan

Abstract: In the foreign exchange market, electronic trading (e-FX) has developed and expanded, bringing benefits such as lower trading costs and more trading options. To take advantage of these benefits, e-FX customers need to choose appropriate trading venues and methods. In addition, the development of e-FX has led to a fragmentation of liquidity in the foreign exchange market, making it more difficult to monitor market trends, and there are concerns that price discovery in the foreign exchange market may be undermined in the future. Furthermore, as the e-FX infrastructure advances internationally, the presence of the Tokyo market as a financial center may be affected, involving an outflow of foreign exchange transactions.

Keywords: Foreign Exchange Market; Electronic Trading; Market Structure (search for similar items in EconPapers)
JEL-codes: F31 G12 G15 (search for similar items in EconPapers)
Date: 2025-03-24
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