How does FGX enhance liquidity in the foreign exchange market?

FGX enhances liquidity in the foreign exchange market primarily by providing a marketplace for direct currency trading. This approach allows participants to engage in transactions without the need for intermediaries or complex processes, thus facilitating quicker and more efficient exchanges of currencies. When traders are able to buy and sell currencies directly with one another, it not only increases the volume of trades but also narrows bid-ask spreads, which is essential for maintaining an active and liquid market.

In a direct currency trading environment, participants can respond immediately to market conditions, leading to heightened trading activity. Increased trading volumes typically result in better pricing and more opportunities for profit, which attracts more participants and reinforces the cycle of liquidity.

The other choices do not contribute effectively to liquidity. Limiting trading hours would restrict access and reduce the number of transactions that can occur. Using a single currency for all transactions could lead to inefficiencies and a lack of options for traders. Focusing on a limited number of currencies would also restrict the market's ability to facilitate diverse trading opportunities, which would diminish overall liquidity.