The Traditional Brokers: What are their Chances in the Forex?

The electronic brokers compete with the traditional brokers. The electronic brokers offer lower costs, increased speed and a better guarantee of transparency and of anonymity. The only real advantage of the traditional brokers is the gathering of information. We investigate whether the traders in the foreign exchange market consider that to be crucial, which is equivalent to asking “Do traditional brokers have any chance in the forex?” We build a simple model and use the results of a questionnaire that we elaborated and that was sent to the users of the brokers’ services in the Portuguese foreign exchange market. We also use transaction data from the most important dealer in the Portuguese market. Considering this dealer to be representative, we conclude that the main advantage of the traditional broker is not much valued by the dealers. This does not leave a promising future for the traditional broker.