Edited by Randall W. Forsyth

WITH THE DOLLAR IN A SEEMINGLY INEXORABLE decline, readers' interest in trading foreign currencies online is on the rise. The currency market is quite fragmented, with most transactions occurring between a bank and its customers. It's a huge market, with daily volume often exceeding $1 trillion per day. According to Greenwich Associates' recent research, electronic foreign exchange trading is booming -- almost 40% of all institutions globally traded currencies electronically last year, and traders executed 47% of all tickets electronically.

The emergence of multibank platforms in the 'Nineties enabled customers to get prices from multiple banks via the automated request-for-quote (RFQ) process. Using these platforms, customers ask for pricing on a currency pair from one or more banks and then deal on the best prices provided. In many ways, these platforms automate electronically the old telephone-trade execution protocol without adding additional value.

Hotspot FXi (www.hotspotfxi.com¹) was formed in 2001 by a team of experienced forex executives from major banks and investment houses. Their goal was to develop a centralized exchange model for the fragmented spot-currency market. Although the platform is intended for institutional traders, individual investors can get in on the action through a brokerage account that utilizes the RealTick platform.

When it was founded, Hotspot FXi expanded the multibank-platform model by introducing a centralized exchange/ECN (electronic commerce network) market structure, which can enhance customer control of trade executions. Hotspot FXi provides anonymity, dynamic depth-of-market view, live-streaming, executable prices and the ability to bid and offer inside, outside or at the existing dealing spread in the market.

Using Hotspot involves downloading its application and installing it on your computer. The Trade Entry screen is the primary trading screen for the system. You can add, subtract, or reorder the view of currencies on the screen. This screen also displays the full depth-of-market -- bids, offers, and available quantities.

Hotspot FXi was designed for institutional currency traders, but also can be used by individuals. It provides both the prices and the sizes of bids and offers.

Users can enter bids and offers via the Trade Entry screen as well as execute trades on live prices instantaneously. The Trade Entry screen is designed to provide information and visual cues so that users can react quickly to changes in the market. The white center area on the trading screen is the dealing area, while the outside areas framed in black provide color-coded available bid and offer information.

The black area to the left side of the display is for bids, and the right is for offers. Each bar in the black areas denotes a quantity of bids or offers. These bars are color-coded to show the amounts (in millions) at a given price. The inside boxes show the best bid and offer currently in the market. If you click on the price, you can buy or sell at that rate.

RealTick (www.realtick.com²), published by Townsend Analytics, allows its users to trade spot foreign exchange on Hotspot FXi's ECN-structured marketplace with the same trading functionality and depth-of-market and real-time market data that RealTick provides for listed and over-the-counter securities. Customers can trade all of Hotspot FXi's currency pairs, including currency pairs related to the international equity, futures and options markets throughout North America and Europe to which RealTick provides access.

Currency trading is only for financial sophisticates. But if you want to want to diversify your assets away from depreciating dollars, with less risk, EverBank (www.everbank.com³) offers certificates of deposit denominated in foreign currencies. Deposits of up to $100,000 are insured against bank insolvency by the Federal Deposit Insurance Corp., though not against underlying currency fluctuations. It even offers an account pegged to the Chinese renminbi.

The Rich Are Different

Intuit's Quicken and Microsoft Money -- as reviewed here Sept. 27⁴ -- just don't appear to have enough juice to manage the complex financial affairs of the very wealthy. Recently, however, Financial Navigator (www.finnav.com⁵) shared with The Electronic Investor a presentation of its suite of products to help the upper crust keep tabs on their finances. And indeed, it seems up to the job.

Financial Navigator says its products are targeted at those with $20 million and up. The scenario presented assumed a family with $2.5 billion in assets spread out over 40 trusts, 25 income beneficiaries, one S-corporation, three limited partnerships and a private foundation.