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I'm not talking about the law of one price here, just the fact that the global currency exchange trade is decentralised. There's no one exchange that aggregates
by Youden 5y ago
I'm not talking about the law of one price here, just the fact that the global currency exchange trade is decentralised. There's no one exchange that aggregates everything and can give you a single authoritative price.
In other assets, like equities, there often is a single central exchange. If you want to buy CURI for example, it's only listed on NASDAQ, so the price on NASDAQ is The One True Price as far as a normal person is concerned.
There's no such central exchange for currencies.
- kasey_junk 5y agoIt’s not even true (anymore) that CURI is only listed on NASDAQ. It’s traded at lots of venues but there is at least a benchmark bid/ask based on US securities law. In fx it’s the law of whoever has the most information because there is no benchmark market at all. It’s why fx pricing is so hard to do right.
- wdaareg 5y agoBased on our experience speaking with a number of institutional players, including traders and banks, what we found is that the institutional rates are unbelievably efficient, but the situation immediately gets worse as you move away from these centers of liquidity. If you talk to 3rd party institutional FX providers, they'll immediately mark up rates because its how they make all of their money.
- 323 5y agoWhat you say doesn't really apply to currencies, at least not to major ones. All currency exchanges track each other extremely closely, because it's extremely easy to arbitrage between them.