Liquidity withdrawal in the FX spot market: a cross-country study using high-frequency data

Alexis Stenfors, Masayuki Susai

    Research output: Working paper

    Abstract

    This paper studies the frequency and speed of limit order cancellations in the FX spot market for three categories of currency pairs. The first category includes the three most actively traded currency pairs (EUR/USD, USD/JPY and EUR/JPY), which have been at the forefront of algorithm trading. The second category includes two smaller G10 currency pairs (EUR/SEK and EUR/NOK) and the third category (USD/MXN, USD/RUB and USD/TRY) includes three of the most actively traded emerging market currencies. By investigating both market-specific and order-specific drivers of liquidity withdrawal, we report several findings that could serve to question traditional market microstructure theory as well as conventional ‘market wisdom’ with regards to trading behaviour on electronic trading platforms.
    Original languageEnglish
    PublisherUniversity of Portsmouth
    Pages1-48
    VolumePortsmouth Business School Working Papers in Economics & Finance
    Publication statusPublished - 31 May 2017

    Publication series

    NameWorking Papers in Economics & Finance

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