Electronic trading in FX will exceed 60% by 2010, says Tom Price ,TowerGroup senior analyst, at the research firm’s annual Financial Services Conference and Exhibition in Boston. In Price’s seminar, “Foreign Exchange: Old World and New World Market Growth”, he describes how FX trading has changed and how it will continue to evolve into a highly automated marketplace similar to the equities market. He notes that FX average daily volume will exceed $3 trillion in 2007, with more than 45% of trading being done electronically by end of this year.

Price explains how FX was traditionally traded to pay for goods and services, but now it is being traded as an asset class to gain alpha and as a hedging strategy. Hedge funds are currently leading the charge, but traditional asset managers are not far behind, Price notes.

Price believes that single-bank FX portals will increase the efficiency of their IT spend by leveraging their platforms to become multi-asset-class trading venues. He also points to a model offered by new comer, FX MarketSpace, that will serve to consolidate fragmented liquidity in the FX market.