Market structure and inefficiency in the foreign exchange market

Mark Flood

No 1991-001, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This paper investigates the intradaily operational efficiency of the U. S. foreign exchange market by conducting computer simulation experiments with market structure (the numbers of market?makers, brokers and customers). The results indicate significant operational inefficiencies which can be explained by temporary inventory imbalances inherent in a decentralized market. The results also suggest that much of this inefficiency could be alleviated through a centralization of price information.

Keywords: Foreign; exchange (search for similar items in EconPapers)
Date: 1993
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Citations: View citations in EconPapers (4)

Published in Journal of International Money and Finance, v. 13, no. 2 (April 1994) pages 131-158

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Journal Article: Market structure and inefficiency in the foreign exchange market (1994)
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DOI: 10.20955/wp.1991.001

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