Friday, July 19, 2024

Internalization

In this article, We learn about “Internalization “.Let’s Go!

Internalization is the process by which dealers seek to match staggered offsetting customer trade flows on their own books, rather than immediately trading related inventory imbalances in the inter-dealer market.

Flow internalization means that traders match transactions through their own internal books instead of conducting transactions on the open market.

For example, let’s say a bank has Customer A who wants to buy $100 million and Customer B who wants to sell $100 million.

Match them with each other to save on brokerage fees.

It would be even better if these savings could be passed on to customers.

The key to being the best international is having enough traffic to successfully match customers and having the best technology.

Of course, this means that the largest banks that handle the most currency transactions (known as “traffic monsters”) are the best at internalizing.

If you want to learn more foreign exchange trading knowledge, please click: Trading Education.

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