(Harvest) Getting investors to change their trading habits requires both education and demonstrable economic incentives. In the face of the growth in FX futures trading, Greenwich Associates set out to examine and assess the potential economic benefits of utilizing futures as an alternative to trading in the OTC markets.
To do so, we employed a proprietary quantitative model to analyze the costs associated with trading FX over-the-counter (OTC) against comparable FX futures. The model calculates the cost of opening, maintaining and closing out a position. To validate key inputs into the model and gather feedback on current demand and pricing, we spoke with FX traders on the buy and sell side.
