I’m sure all are well aware of the crackdowns which have been going on in the interbank trading market, whether it be the supposed collusion between banks with regard to Fixing rates or traders ganging up on the market in on-line chat-rooms on Reuters Messenger or Bloomberg.
Increased regulatory oversight and greatly increased compliance measures mean that bank traders and dealers are much less willing to share their information. Telephone and email communications are totally out, and it’s really only through personal interaction that information is now passed. This means that the information is now a lot slower in getting into the marketplace. This is one instant where improved communication methods has actually led directly to a slowing down in the speed of information flow.
This change in market dynamics is also leading to a reduction in trader activity and volatility. Traders don’t have the information sources that they were used to and therefore don’t trade as much.
