THETRADETECHFX DAILY
Liquidity provision during tariff-led volatility
The unveiling of new US trading tariffs in April sparked record levels of FX turnover across markets, putting liquidity provision to the test and refocusing attention on the current state of the FX liquidity landscape. The TRADE explores how well buyside trading desks fared during this period and how concerns about the availability of FX liquidity played out.
From page 1 According to Patrick Bartle, managing director, LMAX Exchange, FX liquidity also dissipated from most traditional venues, with spreads widening sharply and depth of book diminished as banks and liquidity providers pulled back during this period.“ Liquidity is increasingly concentrated on transparent, firm-liquidity venues, like LMAX Exchange, which can handle this persistent volatility and help manage many of the execution issues that come with this environment,” Bartle says.“ Alternative liquidity providers were crucial. During the April tariff shock, we posted record trading volumes, including our first ever $ 50 billion volume day. Our deep and diverse liquidity pools provided an essential source of consistent pricing and execution when others were failing.”
Buy-side perspectives – resilience through relationships Despite these stresses, many buy-side desks reported manageable trading conditions, pointing to their ability to adapt and rely on established relationships with liquidity providers. Firms generally reported little to no difficulty sourcing liquidity during this volatile period, mainly due to the continued reliance on established relationships and opting for execution methods suited to the market conditions, including a continued reliance on voice trading. During this period, Christian Beinert, foreign exchange trader at MEAG, says that despite significantly wider spreads,
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