The evolution of the market-place

However, despite rather flat markets, the year has on the whole been a positive one for most participants. The very fact that there has not been the consolidation of platforms some had predicted and that new ones have sprung up, indicates that the overall growth in volumes has counteracted the deleterious effects of low volatility.

The continuing growth in popularity of algorithmic trading – as demonstrated by a number of banks jumping on this bandwagon – demonstrates how the market adapts to track down opportunities to drive profits.

Among a number of changes in ownership over the year, the most significant by far has been the purchase of EBS by Icap. The move reflects how ready to adapt the most forward-looking companies can be when they recognise that the fundamental dynamics of the market are shifting. While Icap had already made significant investment in e-broking, it recognised that to continue playing a leading role in the market, it needed to take its electronic offering to the next level.

The world's largest money broker still sees a long-term future for the voice brokers that built the business. The decision to move them to emerging markets shows that Icap sees e-broking as the only game in town for the majors.

The hubbub surrounding the launch of FXMarketSpace shows that some parts of the market are always interested in new venues in a bid to capture profitable liquidity. However, while the CME/Reuters joint venture has successfully generated interest and anticipation from the media and the market, scepticism about the extent of its ability to move the market to a central counterparty model persists. Next year should reveal to what extent it succeeds in this ambition.

There has also been evolution, if at a slower pace, from the market that everyone wants a piece of – China. The continuing tweaks to its foreign exchange regime may not amount to a step change, but they do show a willingness to engage with the outside world and move gradually towards a freely tradeable renminbi.