Learn, Important Facts: Liquidity
YH: Entry to fluidity will grow into easier as technology persists to improve as well as standardize.
True, high liquidity ensures that trade receives location 24 hours a day and costs on screens are public info. However, the process of rate or price judgment is far from clear. In exchange for of consistent thoughts of demand and supply, the commerce is driven by rumours and waitings, the operation of individual players is indeterminate and there is a dizzying variety of competing trading methodologies, motives and beliefs. Yes and no, depending on the kind of venture, on leverage and on institutional factors such as the degree of standardization, availability of fences and clearing and settling procedures. On the one hand, foreign exchange sells are relatively straightforward. There is an agreement to barter cash flows in 2 miscellaneous foreign exchanges in a peculiar style on a distinguished date.
Rising FX volatility led to high losses, which proved highly difficult for funds to settle as the fluidity of the fundamental capital resource in some portfolios almost disappeared. The same occured certainly with redemption funding requirements but, in the occasion of Fx, directors didn't have the choice to gateway or put the fund.