Electronic Foreign Exchange Trading (e-FX):
Developments in and implications for the Tokyo FX Market
March 24, 2025
ONISHI Fuyuko*, HIRAI Yuichiro, ARUGA Ryo, BESSHO Hidemi**
Financial Markets Department
* currently the Research and Statistics Department
** currently the International Department
Abstract
In the foreign exchange market, electronic trading (e-FX) has developed and expanded, bringing benefits such as lower trading costs and more trading options. To take advantage of these benefits, e-FX customers need to choose appropriate trading venues and methods. In addition, the development of e-FX has led to a fragmentation of liquidity in the foreign exchange market, making it more difficult to monitor market trends, and there are concerns that price discovery in the foreign exchange market may be undermined in the future. Furthermore, as the e-FX infrastructure advances internationally, the presence of the Tokyo market as a financial center may be affected, involving an outflow of foreign exchange transactions.
Notice
The Bank of Japan Review Series is published by the Bank to explain recent economic and financial topics for a wide range of readers. This report, 2025-E-4, is a translation of the Japanese original, 2024-J-13, published in November 2024. Views expressed are those of the authors and do not necessarily reflect those of the Bank. If you have any comments or questions, please contact Financial Markets Department (E-mail: fxsurvey@boj.or.jp).