Chapter 588 Foreign Exchange Trading (Page 1/1)

Dominating the stock market? Look at some of the projects?!!!

After Li Zhongxin listened to Mitsui Masako's words, a wry smile appeared on his face.

Now that most of his funds are already in the stock market, and they have all made a lot of money, he is preparing to slowly withdraw his funds from the Tokyo stock market, and it is impossible to dominate the stock market.

And looking at some projects, that's even more nonsense.

Zhongxin Company has enough projects now, and if it does another project, I'm afraid that he and Wang Bo will both be anxious.

He came to Tokyo this time mainly to talk to Masako Mitsui about gradually withdrawing some of his funds from the stock market.

After withdrawing a large amount of funds from the stock market, Li Zhongxin wanted to start trading foreign exchange with these funds.

Forex trading is different from stock trading, and in the 80s, the main trading mode was voice trading.

The end customer needs to call the dealer bank to buy and sell foreign exchange, and after the bank gives a quotation and is accepted by the customer, the bank inquires with its peers in the interbank market and executes the hedging transaction.

The interbank market is clearly separated from the customer service market, and the interbank market completely excludes small banks and end customers.

Because a single transaction in the interbank market is basically more than one million to five million US dollars, not only can end customers not enter the interbank market, but also end customers cannot directly trade with each other.

This traditional forex trading model has low market transparency, high transaction and operating costs, wide spreads, and a low degree of integration.

At this time, the transaction cost and operating cost are high, and the spread is large. In order to gather information, traders often ask each other for quotes and even trade from time to time.

Traders are therefore passing on some unwanted positions between traders until the positions are accepted by an end client.

At this time, because the market information is widely scattered in the dealer's counter, and the dealer or broker is more likely to face customers in their own country or region, the international foreign exchange market is just a cross-border connection of dealer banks.

Li Zhongxin wanted to do foreign exchange trading, but some time ago he took a lot of time to study the books on foreign exchange trading that Kutsui mailed him.

Through these books on forex trading, Li Zhongxin learned some things about forex in the 80s.

At this time, most of them are MM models, that is, market makers. The company that provides buy and sell orders for people is what we call a forex trading platform.

The market is the investor's counterparty.

In many cases, the investor's order, or the price at which it was opened, is not tied to the market, simply put, the broker is the market.

They have a very obvious interest in the loss of investors, and when investors lose, they mean profits.

MM market makers will never requote orders because they do not need to put the price given by the investor into the interbank market.

They simply choose whether to accept your order or not.

In layman's terms, the MM mode is the gambling mode, which is easy to form a black platform.

In later generations, Li Zhongxin came into contact with many black platforms, like some micro-disk platforms, which are basically black platforms, and they gambled with the investors below, but the trend was shown to investors according to the international trend.

What about the second mode! It's the STP model, which is what we call a broker.

STP brokers are another form of market maker broker.

In this economy, most of the time it displays its own quotes, which have a certain correlation with the interbank quotes.

The STP broker's commission comes from two sources, one is the loss of the client after failure, and the other is the commission of the successful user.

To use the simplest example, when you trade a spread of two pips, the broker makes a spread of one pip in the interbank market at the same quote, or makes a risk-free trade with another broker or bank.

In other words, it is difficult to guarantee fairness in such a model.

Li Zhongxin came to Tokyo this time to study with Masako Mitsui how they could avoid such a trading model.

It's eighty-five years now, but there is no such thing as the Internet in later generations, let alone direct transactions on the Internet, Li Zhongxin feels that he must find the most reasonable way to operate this matter.

When Li Zhongxin learned some knowledge of foreign exchange trading, he also had a general idea in his heart.

At this time, the London foreign exchange market is the best choice for Li Zhongxin.

At the time of China's reform and opening up, the United Kingdom had completely abolished foreign exchange controls, and basically became the only market, and the volume of foreign exchange transactions continued to grow, and at this time it has maintained its position as the world's first market.

As a country where there is no foreign exchange control, the boundary between the international market and the domestic market of the British foreign exchange market is not obvious, domestic institutions can participate in international foreign exchange market transactions, and there are very few restrictions on foreign financial institutions to enter the British domestic market.

It is for this reason that cross-border transactions account for a high proportion of the UK's foreign exchange market.

More than 50% of spot transactions in the UK foreign exchange market are made through electronic economic systems and electronic trading platforms (this is a single bank and multi-bank platform).

The provision of electronic foreign exchange trading was developed by Reutersdealing, which was quite backward by the standards of Lee's later generations, but at this time in the mid-eighties, it was one of the most advanced trading systems.

If the web hadn't been invented, the system would probably have been used until now.

The main body of the foreign exchange market in London is made up of foreign exchange banks appointed by the Bank of England (clearing banks, commercial banks, other commercial banks and foreign banks in the country) and foreign exchange brokers.

What Li Tadanobu wanted to discuss with Masako Mitsui was whether he could get a seat from the Bank of Tokyo to enter the London foreign exchange market this time.

Li Zhong has a deep understanding of the market trend of foreign exchange behind the square agreement, which is a thing that he has been planning since he was reborn, and he feels that he must engage in this foreign exchange transaction.

And Li Zhongxin doesn't want to be hacked by those black platforms or other brokers to lose most of his money.

Based on the current assets of Li Tadanobu and Masako Mitsui, they are now enough to build a small bank, and then negotiate with the Bank of Tokyo, and then open a seat in the Bank of Tokyo to enter the London market.

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