Liquidity Mirage?
Another day of large moves. Liquidity Providers complaining about seeing flow from multiple channels simultaneously. Participants complaining about gaps in pricing, and shortages of liquidity.
The FX market has a current problem of liquidity mirage, but the very same market participants who complain about it are the very same people who are responsible for creating it. A bank doesn’t have to quote all customers on all platforms. To me this is the most basic and logical thing.
It’s a rare situation that the very same institutions that are the biggest victims, can immediately stop their pain, by choosing to limit the number of Multi Dealer Platforms (MDPs), a liquidity maker posts prices on. But will they?