There are two simple solutions. First, change the structure. It is an anachronism that, in such a technologically sophisticated world, a large chunk of forex trading still takes place on the phone. A fully electronic market is essential and initiatives by aggregators – such as Thomson Reuters’ FXall or FTSE Cürex – to bring together data from rival fixing platforms are a useful first step. But why not go the whole hog and force forex trading on to an exchange where it is policed as closely as the equities market?
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A few years ago I was chatting with an executive at CME. CME (naturally) was interested in more "transparent" exchange of derivatives. The established procedure was that a buyer would go to a bank and indicate his desire to buy; similarly a seller would indicate his desire to sell; the two would not meet, and only the bank would know what the one offered and the other asked; it was an inexhaustible source of money for the bank. CME wanted to get into it, and _its_ slogan was "Transparency."
Derivatives _also_ changed clearing-house procedures radically, form a formerly rather simple affair to an extraordinarily complex, even mysterious, realm of activity.
Carrol