Exchange rate is quoted by dealers based on the order flow they receive. Market survey and FX market microstructure literature suggest that financial customers order flow is the most informative and leads total order flow. This paper explains exchange rate dynamics by linking financial customers...

This paper examines the effects of a semi-transparency event, introduction of the electronic trading system (EBS), on the market quality of a typical dealership market - the FX market. We find that increasing transparency leads to lower market volatility and higher trading volume, but the...