09-29-2019, 09:03 AM
Market makers have been replaced by liquidity algos, which manage a bank’s book for example but are not compelled to make a two way price in its role as a liquidity provider. So when news comes out bids or offers get pulled or scaled back, spreads may widen and a currency falls or rises as if in an air pocket.A lack of market makers is not reserved for just the forex market. Gone are the days of the Fed funds traders as can be seen by the recent meltdown in that market and stock specialists are no longer there to provide a two-way market.