How Welcome is Volatility to Brokerage Firms?

The video discusses the role of volatility in the FX market, highlighting its importance for trading activity. It addresses the challenges posed by low volume, which can lead to aggressive pricing. The availability of credit is crucial, as traditional market makers withdraw, creating opportunities for brokerages to step in. Upcoming events like Brexit and the US election are identified as potential sources of high volatility. The brokerage's strategy focuses on providing credit lines to capture market share in this evolving landscape.

Why is volatility considered important in the FX market?

• It reduces trading activity.

• It decreases market risk.

• It increases trading volume.

• It stabilizes currency values.

What is a significant challenge faced by the FX market due to a lack of volume?

• Higher liquidity.

• Aggressive moves and pricing.

• Increased stability in pricing.

• Reduced need for credit.

What role do high-frequency trading firms play in the FX market?

• They reduce the need for credit.

• They act as traditional market makers.

• They provide stability to the market.

• They step in when big banks withdraw.

How can brokerage firms capture market share during high volatility events?

• By providing more credit lines.

• By reducing credit lines.

• By increasing trading fees.

• By stepping back from the market.

What is the estimated percentage of daily volume affected by the lack of credit lines?

• 10%

• 25%

• 50%

• 75%