For heavily-traded currency pairs, our hypothetical FX trader is getting bid/ask spreads that are a fraction of a basis point for a $ trade, rising to a few basis points for a large trade. And she’s taking 5  See for instance https://www.bis.org/publ/mktc10.htm and https://www.marketfactory.com/whitepaper-why-does-fragmentationcontinue-to-increase-increasing-entropy-in-currency-markets/ 6 See for instance my predecessor’s speech on fast markets at https://www.bankofengland.co.uk//media/boe/files/speech/2017/keeping-up-with-fast-markets; or the recent ECB paper https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2300~68bda93b78.en.pdf. 7 https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/why-diverse-markets-need-diverse-talent-speech-by-andrew-hauser 7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  advantage of the changes in the market brought about by the Code: accessing so-called ‘Global Code pools’, and increasingly firm, or near-firm, pricing.8 Many of you here today will recognise aspects of this experience. But many won’t – and the reason for that is clear. Navigating complexity requires understanding, data, connectivity and computing power – and that can be a challenging combination. To give an extreme example: one of the large non-bank liquidity providers is said to have access to 42 petabytes of data storage.9 That’s more than 4,000 times what’s needed to hold the entire Library of Congress and would cost around $ a year from Amazon Web Services, at their most basic standard rate. If you need that sort of kit to scale the mountain, many will struggle to get to base camp. Of course that’s an extreme comparison. So let’s sketch a second storyline: that of a large to mid-tier buyside firm, for whom FX is an important, but by no means dominant part of its overall business.

BIS Review 50/2003  1  An account of the reasons for the deviation from the inflation target is included in Norges Bank’s Report on Monetary Policy in 2003 - the first eight months. In the years 1998-2002, the Norwegian economy was characterised by substantial labour shortages and a considerably higher rise in labour costs than among its trading partners. Last year was the fifth consecutive year of very high annual growth. Wage growth was substantially higher than the level that over time is consistent with the inflation target and with normal productivity growth. Pay increases varied widely across the different groups. In Norges Bank’s view, there was therefore a substantial risk of new wage-wage spirals. Further rounds of such strong wage increases might have led to a considerable decline in output and employment. Monetary policy was therefore tightened by an interest rate increase last summer. At the one-year horizon, the strong krone would push down inflation to below 2½ per cent, but the effects of strong wage growth would subsequently dominate. Last year, Norges Bank’s Executive Board struck a balance between the consideration of stable inflation developments in the short term and the consideration of stability in output and employment. It was expected that inflation would be low in 2003. However, price developments are uncertain even 6 months to 1 year ahead. There was thus a possibility that inflation could fall even lower than projected, and be more than 1 percentage point below target. Nevertheless, the deviation from the forecast is unusually large.