Though the original adverse-selection models were inspired by equity markets, adverse selection has been assumed to dominate price discovery in FX since Lyons (1995), which shows that trade size and spreads were positively related for a particular interbank dealer during a week in 1992. Most subsequent research has instead concluded that interbank currency spreads bear little or no relation to trade size (e.g., Yao (1998), Bjnnes and Rime (2005)). Nonetheless, Bjnnes and Rime (2005) suggests that this is not necessarily inconsistent with adverse selection: spreads could be unrelated to trade size under adverse selection if it is only the direction of a trade that carries information, and presents evidence consistent with this alternative hypothesis. Most FX microstructure papers continue to draw on adverse selection as their primary interpretive framework. Marsh and O'Rourke (2005), for example, estimates Easley, Kiefer, and O'Hara's (1996, 1997) adverse-selection-based measure of private information on daily FX customer data. Similarly, Payne (2003) estimates a VAR decomposition of interdealer trades and quotes and interprets the results, following Hasbrouck (1991), through the lense of adverse selection. Indeed, in this literature it is sometimes assumed that a transactions immediate "price impact" is a measure of its "information content" (e.g., Luo (2002)), as implied by adverse selection. Our evidence indicates that adverse selection may have limited practical relevance in the customer tier of the FX market. We show that customer spreads are widest for the trades least likely to carry information. More specifically, customer spreads are inversely related to trade size, and are narrower for the customers that dealers consider most informed. These reportedly informed customers are financial firms, meaning asset managers such as hedge funds or mutual funds; the other broad category of customers is commercial customers, meaning firms that import or export.1 The resulting cross-sectional variation in customer spreads is substantial: baseline spreads in the euro-dollar market range from about four pips (or equivalently ticks) on large financial trades to 13 pips on small commercial trades. (A pip is one unit of the smallest significant digit in an exchange rate as conventionally quoted. In the euro-dollar market, where the exchange rate averaged $1.1128/ during our sample period; a one-pip change from that level

FX MARKET STRUCTURE AND DATA
The currency markets make all other markets look tiny. FX trading averages almost $2 trillion per day (B.I.S. (2004)) over twenty times daily trading on all NYSE stocks. An active currency trades as much in a half hour as a high-volume stock on the Paris Bourse trades in a day. About half of this trading takes place in the interdealer market (B.I.S. (2004)), trading in which is now largely carried out on orderdriven electronic exchanges. The customer market, by contrast, is quote-driven.3 Hundreds of dealers compete in the euro-dollar market, which accounts for almost a fifth of all transactions (B.I.S. (2004)). There is no significant retail component to FX trading; virtually all trading is carried out by institutions. Since currencies are important in commerce as well as finance, however, the institutional customer base for FX includes non-financial as well as financial firms. (Bjnnes and Rime (2005) provides an excellent description of the market.) Our data comprise the complete USD/EUR transaction record of a bank in Germany over the 87 trading days from 11 July 2001 to 9 November 2001. Though the data technically refer to the overall bank, they are an accurate reflection of a single dealer's behavior because only one dealer was responsible for the bank's USD/EUR trading. For each transaction we have the following information: (1) the date and time;4 (2) the direction (customer buys or sells); (3) the quantity; (4) the transaction price; (5) the type of counterparty dealing bank, financial customer, commercial customer, preferred customer; (6) the initiator; and (7) the forward points if applicable. We include outright forward trades, adjusted to a spotcomparable basis by the forward points, as recommended by Lyons (2001). The bank's inventory position is inferred by cumulating successive transactions.5 Following Lyons (1995), we set the daily starting position at zero. This should not introduce significant distortions since our dealer keeps his inventory quite close to zero, as shown Figure 1. The dealers average inventory position is EUR 3.4 million during the trading day and only EUR 1.0 million at the end of the day. Table I provides basic descriptive statistics.6 A preliminary comparison of our dealer with the large dealers described in the literature is provided in Table II. Table III provides information on the size distribution of our dealers transactions. The small
size of our dealer is reflected in his total daily trading value, average transactions per day, average inventory position, and mean absolute price change between transactions.7 Our dealer is comparable in size to a NOK/DEM dealer at the large dealing bank examined in Bjnnes and Rime (2004). Our bank is probably a reasonably good representative of the average currency dealing bank because small dealing banks are far more common than large ones (B.I.S. (2002)). Nonetheless, big banks dominate currency dealing. Despite the small size of our bank, our main qualitative conclusions should generalize to the entire foreign exchange market for at least four reasons. First, the FX market is extremely competitive. Hundreds of banks deal in the major currency pairs and even the largest dealer's market share is only on the order of 10 percent. In such a market, the behavior of any (successful) dealer should accurately represent the behavior of all (successful) dealers. Second, surveys of currency dealers reveal that the primary determinant of currency spreads is the conventional level of such spreads (Cheung and Chinn (2001)). Third, market participants consistently confirm that the pattern we identify is correct. Finally, our small bank's behavior should be representative because it is broadly consistent with that of large banks in many well-studied dimensions. The Appendix provides a detailed comparison of our bank's pricing and inventory management practices with those of large banks analyzed in earlier studies. This analysis suggests that the following statements about larger dealers are equally true for our dealer: The baseline spread for interbank trades is on the order of two pips The baseline spread for customer trades is a few times larger than the spread on interbank trades Existing inventories are not statistically related to quoted prices The dealer typically brings his inventory back to zero by the end of the trading day The dealer tends to bring inventory back to zero in a matter of minutes, a speed that is comparable with that of futures traders and lightning fast relative to traders in equity and bond markets. These parallels support the reasonableness of generalizing from this bank to the market.

Dealer i's regret-free price, Pit, is determined as Pit = it + ( I it I i* ) + Dt. Here, jt is dealer is expectation of the assets true value, conditional on the same noisy public signal; Iit is dealer i's inventory at the beginning of period t; I*i is his desired inventory, which is presumably zero for FX dealers; and Dt is the direction of trade [Dt = 1 (-1) if agent j is a buyer (seller)]. The model assumes that dealers shade prices to manage existing inventories (e.g., dealers lower prices in response to high inventory), which implies < 0. After solving for conditional expectations and taking first differences, one arrives at the following expression for the price change between incoming transactions, Pit = Pit - Pit-1:
Pit = + 1 Dt + 2 Dt 1 + 1 I it + 2 I it 1 + Q jt + t
Much of our discussion will focus on 2, the coefficient on lagged direction, which according to the model is the negative of the baseline half-spread, meaning the spread that would apply before adjustment for trade size or existing inventories. The model also implies that 1 = | 2|/ > | 2| > 0 > 2, where 0 < < 1 is a model-derived parameter that captures the extent to which dealers rely on their priors rather than the current trade in updating their estimate of the currencys true value. According to the model, the intercept, , should be zero if the dealers desired inventory is zero, as is typically true in FX. If the dealer shades prices in response to inventories then 2 = | 1|/ > | 1| > 0 > 1. In FX, dealers typically rely on the interbank market to manage their inventory (Bjnnes and Rime (2005)), rather than shading prices, which implies that both 1 and 2 should be insignificant. Since large trades in the model sometimes reflect a big gap between the assets true value and the dealers quote, the dealers spread rationally rises with trade size and the coefficient on trade size, , is expected to be positive. A positive coefficient on trade size could also, however, capture an inventory effect noted in Ho and Stoll (1981): larger trades leave market makers with higher inventory and thus greater inventory risk, so larger trades should carry wider spreads. Adverse selection and this inventory effect, which we will refer to as a prospective inventory effect, are observationally equivalent here. Since adverse selection and inventory shading are integral features of the Madhavan-Shmidt (1991) model, one might wonder whether the model can be used if neither feature actually influences the market.

percent spread is not considered unreasonable on tiny trades. For estimation purposes we distinguish the following size ranges: Large trades: {|Qjt| [1 million, 25 million)}; medium trades: {|Qjt| [0.5 million, 1 million)}; and small trades: {|Qjt| (0, 0.5 million)}. To examine the bilateral relationship between trade size and spreads we interact the five spread determinants of the Madhavan-Smidt (1991) model with dummies for large (LG), medium (MD), and small trades (SM). The results of this analysis are presented in Table IV. As expected, the constant term is insignificant, implying that our dealers preferred inventory level is zero, and the coefficients on current and lagged inventory are insignificant as well, consistent with our dealers preference for managing his inventory through the interbank trades rather than price shading. As predicted by the model, the coefficient on current direction exceeds the absolute value of the coefficient on lagged direction for all size categories. The results suggest that adverse selection has little influence over customer spreads in this market. The coefficient on trade size is never statistically different from zero, and is actually negative in one case. Furthermore, estimated baseline half-spreads on small, medium, and large trades are 11.5 pips, 4.5 pips, and 1.6 pips, respectively. Wald chi-squared tests indicate that these differences are statistically significant. The statistics are 23.52 for the small-medium comparison and 122.54 for the small-large comparison, both of which have marginal significance below 0.0001. The statistic is 3.97 for the medium-large comparison, which has marginal significance below 0.05. These results thus imply a negative relation between trade size and spreads, inconsistent with adverse selection. The conclusion that trade size and FX customer spreads are negatively related is statistically and economically strong and is sustained across three robustness tests. It is also consistent with the negative relationship between trade size and spreads observed in other quote-driven markets. Such a relationship characterizes U.S. bond markets. In the municipal bond market spreads average 2.23 percent for small trades and 0.10 percent for large trades (Harris and Piwowar (2004)). In the U.S. corporate bond market spreads for BBB-rated bonds average $2.37 per $100 face value for trades involving ten bonds or less but only $0.37 per $100 face value for trades involving over 1,000 bonds (Goldstein et al. (2006)). A negative

relationship has also been documented in the London Stock Exchange (Hansch et al. (1999)), where average quoted spreads range from 165 basis points for the smallest stocks to 112 basis points for the largest stocks (similar results are provided in Bernhardt et al. (2004)). By contrast, spreads are apparently positively related to transaction size, as predicted by adverse selection, on the order-driven NYSE (see, for example, Harris and Hasbrouck (1996); Bernhardt and Hughson (2002); Peterson and Sirri (2003)). The negative relationship between trade size and FX customer spreads does not extend to the FX interbank market. The earliest study using interbank transaction data, Lyons (1995), finds a positive relationship between trade size and spreads, and subsequent studies find little or no relationship (Yao (1998), Bjnnes and Rime (2005)). The absence of any such relationship in recent years presumably reflects the fact that interbank trades are consistently small so their size is uninformative.10 Customer Type: To examine the bilateral relationship between spreads and customer type we interact the key variables of the Madhavan-Smidt (1991) model with dummies for transactions with financial customers (FC) and commercial customers (CC). The results, which are presented in Table V, indicate that the baseline half-spread for financial customers is only 4.2 pips while the baseline half-spread for commercial customers is 10.8 pips. The Wald chi-squared test statistic for this difference is 21.82, with p-value below 0.0001, which indicates that the difference between these figures is highly significant. As usual, inventories do not appear to influence dealer quotes and our qualitative conclusions do not change if we exclude inventories, if we consider only spot trades, or if we include incoming interbank trades (IB). Thus it appears that FX dealers distinguish sharply between commercial and financial customers but not in the manner predicted by adverse selection. Adverse selection has been found to provide a good guide to dealer behavior in other nonanonymous markets, however. The theory works well, for example, in explaining the pattern of price discrimination among specialists on the non-anonymous Frankfurt Stock Exchange. As shown by Thiessen (2003), those specialists provide price improvement when adverse selection costs are lowest and adjust quotes the most after trades that did not get price improvement.

Lyons (2001) and Marsh and ORourke (2005) suggest, based on a negative correlation between commercial order flow and exchange rates in daily data, that commercial trades may have a negative price impact. If so, our analysis suggests that the price impact is certainly not instantaneous, since we find that spreads are positive for both commercial and financial customers. Marsh and ORourke (2005) also suggest that the negative relationship may instead reflect feedback trading, and provide evidence that commercial-customer trades are indeed influenced by lagged returns. Our evidence provides a further indication that the feedback-trading interpretation is more likely to be correct. D. The Huang and Stoll Model Bjnnes and Rime (2005) find no evidence for adverse selection using the Madhavan-Smidt model but do find such evidence when they adopt (a modified version of) the Huang and Stoll regression framework (1997). We close this section by showing that, when the trades of our dealer are disaggregated by customer type and size, the Huang and Stoll model does not support adverse selection though it does support the overall pattern of customer spreads identified above. Huang and Stoll (1997) observes that trade size is relatively unimportant for pricing in markets, like foreign exchange, where large trades are routinely broken up into multiple smaller transactions. Even in such markets, however, the risk of trading with a better informed counterparty remains. Thus, Huang and Stoll's model assumes that prices are determined by a trade's direction and the market maker's existing inventories, but not by a trades size. In this model, dealer i sets his price, Pit, as Pit = it +
S S Dt I it + t. Once again, it repre2 2
sents dealer i's conditional expectation of the asset's fundamental value. The baseline half-spread is S/2 and the effect on price of existing inventory (through price shading) is S/2. Dealer i updates his expectation of the asset's fundamental value in light of the private information revealed by the direction of the previous trade as well as public news: it it-1 = (S/2)Dt-1 + t. The term S/2 captures the information
effect of trade direction and t is a serially uncorrelated public information shock. Combining the pricing and updating rules gives the following expression for price changes between incoming transactions:

Pi t =

S S S ( Dt Dt 1 ) + Dt 1 I it + et , 2
where et t + t. We follow Huang and Stoll (1997) in estimating the model separately for various size categories. We also disaggregate trades according to counterparty. As earlier we use GMM with NeweyWest standard errors. The results, shown in Table VII, broadly confirm our earlier findings: baseline spreads are wider for small trades than for large trades and are generally wider for commercial customers than for financial customers; also, spreads are little influenced by existing inventories. Consistent with our earlier analysis, however, the estimates of the adverse-selection coefficient, , suggest that adverse selection is not influential in this market. The theory predicts that should be larger for financial customers than commercial customers, but this is only true for the point estimates in one of the three size categories and that difference is not statistically significant. The theory also predicts that should be largest for large trades, but the estimated coefficients for large trades are statistically insignificant for both financial and commercial customers.

III. OPERATING COSTS, MARKET POWER,

STRATEGIC DEALING

The cross-sectional pattern of currency spreads just documented is not consistent with adverse selection, despite the widespread acceptance of that hypothesis in the FX microstructure literature. This section examines possible alternative explanations for the pattern of spreads. We begin by considering the components of the standard paradigm beyond adverse selection, which are: monopoly power, inventory risk, and operating costs. Pure monopoly power is unlikely to be important in FX, where hundreds of dealers compete intensely. Inventory risk can also be ruled out as a determinant of our pattern, since the prospective inventory effect implies a positive relationship between spreads and trade size (Ho and Stoll (1981)), rather than the negative relation we observe. In addition,
inventory risk is invariant across customers, so this element cannot explain the relationship between spreads and customer type. The remaining component of the standard paradigm is operating costs. In discussing the negative relationship between spreads and trade size on the London Stock Exchange, Angel (1996) and Hansch et al. (1999) note that such a relationship could arise if per-unit processing costs are smaller for large trades. This occurs with fixed costs, which certainly exist in FX and, in conversation, foreign exchange dealers themselves suggest that they are relevant. However, the relationship between costs and customer type seems unable to explain the smaller spreads paid by financial customers: fixed costs do not vary strongly by customer type, and marginal costs are, if anything, higher for asset managers, who often require the proceeds of a large trade to be split among numerous individual funds. In short, the standard paradigm can explain the relationship between FX customer spreads and trade size but not the relationship between spreads and customer type. One might wonder whether the customer-based differences in spreads could result merely from differences in the intraday pattern of trading. If commercial customers trade more intensely during hours when spreads are widest, they will naturally pay larger spreads on average. Interdealer spreads (the only spreads for which intraday patterns are available) are widest during the London morning and during the FX markets overnight period, which lasts for a few hours after about 5 pm London time (Payne (2003)). Financial-customer trades tend to be concentrated during the London morning hours (Figure 2A,B), while commercial-customer trades are more evenly distributed across the trading day. In consequence, intraday trading patterns predict variation in customer spreads opposite to that just documented. The rest of this section highlights two mutually consistent theories of dealing under asymmetric information that might have more success in explaining why FX spreads vary across counterparty types. One theory suggests that information about current market conditions provides market power which, in turn, affects spreads. The other theory suggests that dealers strategically vary spreads across customers in an attempt to gather private information about near-term exchange-rate returns.12 It is our view that both of these information-based forces operate simultaneously with operating costs.

edge of market conditions, on the basis of which they extract wider spreads. In the game between dealers and their financial customers, both sides are well informed about market conditions but financial customers also have private information relevant to near-term exchange-rate dynamics. Financial customers view themselves as exploiting the market power associated with their private information to extract smaller spreads. Dealers simultaneously view themselves as strategically setting small spreads to increase their business with privately informed customers and learn their information. Both sides are right.

PRICE DISCOVERY

FOREIGN EXCHANGE
The evidence presented so far shows that spreads in the FX customer market are inversely related to a deal's information content, the opposite of the pattern predicted by adverse selection. But, if adverse selection is not the basis for price discovery in currency markets, what is? This section provides an alternative interpretation of the price discovery process in FX and summarizes existing evidence in support of that interpretation. Asymmetric information is the centerpiece of our story, as it must be, but we suggest that information influences inventory management and order choice in the interdealer market rather than spreads in the customer market. Our interpretation thus reflects institutional features of the FX market, such as its two-tiered structure and the importance of the interdealer market for inventory management, that distinguish FX from the simpler market structures assumed in adverse-selection models. Our interpretation differs in a key way from the familiar portfolio shifts model of the FX market articulated in Evans and Lyons (2002). In that model, dealers first absorb inventory from end users, then trade that inventory among themselves, and finally sell the inventory to other end users. The exchange rate moves to reflect information only during the customer trading of round three. If one were to graft our price discovery framework to the Evans and Lyons model, however, one would conclude that the exchange rate moves to reflect information during the interbank trading of round two. Nonetheless, our interpretation creates a coherent picture from disparate stylized facts from FX microstructure.

and Lyons (2004), Bjnnes et al. (2005), and Marsh and O'Rourke (2005). Our analysis also predicts that this relationship between financial order flow and exchange rates is substantially permanent, evidence for which is provided in Lyons (2001) and in Bjnnes et al. (2005). Our analysis predicts a positive and largely permanent relationship between exchange rates and interdealer order flow, which is defined as buy-initiated interdealer transactions minus sell-initiated transactions. (In the order-driven or brokered portion of the interdealer market, the initiator of a transaction is considered to be the dealer placing the market order; in the quote-driven or direct dealing portion of that market, the initiator is the dealer that calls out. In both cases the initiator makes an outgoing trade.) Consistent with this prediction, substantial evidence indicates a strong and positive contemporaneous correlation between interdealer order flow and exchange-rate returns at the daily and weekly horizons (see Lyons (1995), Payne (2003), Evans (2002), Evans and Lyons (2002), Killeen, Lyons, and Moore (2002), and Danelsson et al. (2003), inter alia). Furthermore, a substantial portion of this relationship is permanent (Evans and Lyons (2002), Payne (2003), Killeen et al. (2005), Bjnnes et al. 2005). C. New Evidence Our interpretation of price discovery in FX has three additional testable implications. First, it predicts that interdealer prices are the best measure of the market at any instant. Abundant institutional evidence confirms this implication. Most critically, dealers universally base their customer quotes on the interdealer markets current best bid and offer. In a large dealing room, salespeople construct the quote actually given to a customer from a preliminary quote provided at that moment by the relevant interdealer trader. Those preliminary quotes are in turn anchored on the best bid and offer in the interdealer market. In electronic communication networks (e.g., Currenext, FXAll) the connection between interdealer prices and customer quotes is programmed directly into the pricing algorithm. Beyond these observations, our conjecture also has the testable implication that dealers should be more likely to make outgoing interbank transactions after trades with financial customers than after trades with commercial customers. Finally, our conjecture implies that dealers should also be more likely to
make outgoing interbank transactions after larger trades, since large trades apparently carry more information than small ones. We test these last two implications via a probit analysis of the conditional probability that a given transaction is outgoing in the interbank market: Prob(Tradet=IBout) = P(FCt-1, CCt-1, 10miot-1,|Iit|, Iit2, |Qjt|). (4)

CONCLUSIONS

This paper investigates the process through which information becomes embedded in exchange rates. Our data comprise the complete USD/EUR trading record of a bank in Germany over four months in 2001. These data have the advantage of distinguishing between transactions with financial and commercial customers.
The paper's first contribution is to show that spreads on normal-sized currency trades vary inversely with trade size and are wider for commercial customers than for financial customers. Both components of the pattern are inconsistent with the hypothesis that adverse selection dominates currency spreads, since FX dealers consider large trades to be more informative than small trades and financial customers to be more informed than commercial customers. One potentially important implication of the pattern is that a customer trade's immediate price impact is not a good measure of its information value. The paper's second contribution is to highlight three hypotheses that help explain the crosssectional pattern of currency spreads. We first note that operating costs are largely fixed in FX, which could help explain the negative relationship between trade size and spreads. The customer-based variation in spreads could be explained by Green et al.s (2004) market-power hypothesis. This hypothesis asserts that spreads in quote-driven markets vary positively with a dealers market power relative to a given customer, and that such market power derives in part from knowledge of market conditions. Commercial customers tend to know the least about current market conditions, so this theory predicts they will pay the widest spreads, as they do. The customer-based variation in spreads could also reflect dealers' attempts to strategically gather information about near-term returns (Leach and Madhavan (1992), (1993), Naik et al. (1997)). Dealers may subsidize trades with informed customers in order to learn the information embedded in their trades. Dealers consider financial order flow to be relatively informative, so financial customers pay the narrowest spreads. The paper's third contribution is to create a coherent picture of the FX price discovery process by fusing existing empirical evidence on FX microstructure, including our own, with insights from mainstream microstructure. We first note that, since customers' information is not immediately reflected in the prices they pay, price discovery must take place entirely in the interdealer market. We focus our analysis, therefore, on dealer behavior in the interdealer market, a market that is important for inventory management (Lyons (1997)). The key mechanism behind our suggested price discovery process involves the dealer's response to individual customer trades. We suggest that after transactions with informed customers, dealers will tend to make parallel outgoing interdealer trades placing a market order in the order27

driven component of the market, for example motivated by their inventory as well as by their newlyacquired information. In this way the information from customer trades will be reflected in interdealer prices. After transactions with uninformed customers, by contrast, dealers will be relatively likely to place parallel limit orders or to wait for incoming calls. Our theory predicts that dealers should be more likely to place outgoing interdealer trades after informed customer trades, and we provide evidence that this is true for our dealer. Our theory also predicts some key stylized facts in FX: the positive and substantially permanent relation between cumulative interdealer order flow and exchange rates, as well as the positive and substantially permanent relation between financial order flow and exchange rates. Future research could be productively directed to further tests of our proposed price discovery mechanism as it applies to the foreign exchange market. It could also be fruitful to evaluate whether that proposed mechanism applies in other liquid two-tier markets.
REFERENCES Anand, Amber, and Avanidhar Subramanyam, 2005, Information and the intermediary: Are market intermediaries informed traders in electronic markets? Mimeo, Syracuse University. Angel, James, 1996, Who Gets Price Improvement on the NYSE? Georgetown University Working

Paper FINC-1377-12-694.

Bank for International Settlements, 2002, Triennial central bank survey, foreign exchange and derivatives market activity in 2001 (B.I.S., Basel). Bank for International Settlements, 2004, Preliminary global results, Triennial central bank survey, foreign exchange and derivatives market activity in 2004, (B.I.S., Basel). Bernhardt, Dan, and Eric Hughson, 2002, Intraday trade in dealership markets, European Economic Review 46, 1697-1732. Bernhardt, Dan, Vladimir Dvoracek, Eric Hughson, and Ingrid Werner, 2005, Why do larger orders receive discounts on the London Stock Exchange? Review of Financial Studies 18, 1343-1368. Biais, Bruno, Pierre Hillion, and Chester Spatt, 1995, An empirical analysis of the limit order book and the order flow in the Paris Bourse, Journal of Finance 50, 1655-1689. Bjnnes, Geir Hidal and Dagfinn Rime, 2001, Customer trading and information in foreign exchange markets, Working paper, Stockholm Institute for Financial Research. Bjnnes, Geir Hidal and Dagfinn Rime, 2005, Dealer behavior and trading systems in foreign exchange markets, Journal of Financial Economics 75, 571-605. Bjnnes, Geir Hidal, Dagfinn Rime, and Haakon O.Aa. Solheim, 2005, Liquidity provision in the overnight foreign exchange market, Journal of International Money and Finance 24, 175-196. Carpenter, A., and J. Wang 2003, Sources of private information in FX trading. Mimeo, University of New South Wales. Cheung, Yin-Wong and Menzie D. Chinn, 2001, Currency traders and exchange rate dynamics: a survey of the U.S. market, Journal of International Money and Finance 20, 439-471. Christie, William G., Paul H. Schultz, 1994, Why do NASDAQ market makers avoid odd-eighth quotes? Journal of Finance 49, 1813-1840. Copeland, Thomas E. and Dan Galai, 1983, Information effects on the bid-ask spread, Journal of Finance 31, 1457-1469. Danelsson, Jon, Richard Payne, Jinhui Luo, 2002, Exchange rate determination and inter-market order flow effects, Typescript, Financial Markets Group, London School of Economics. Duffie, Darrell, Nicolae Garleanu, and Lasse Heje Pedersen, 2004, Over-the-counter markets. NBER Working Paper 10816. Easley, David and Maureen O'Hara, 1987, Price trade size and information in securities markets, Journal of Financial Economics 19, 69-90. Easley, David, Nicholas M. Kiefer, and Maureen O'Hara, 1996, Cream skimming or profit sharing? The curious role of purchased order flow, Journal of Finance 51, 811-833. Easley, David, Nicholas M. Kiefer, and Maureen O'Hara, 1997, One day in the life of a very common stock, Review of Financial Studies 10, 805-835. Evans, Martin, 2002, FX trading and exchange rate dynamics, Journal of Finance 57, 2405-2448.

Constant Direction FC X Dt FC X Dt-1 CC X Dt CC X Dt-1

IB X Dt IB X Dt-1

Inventory FC X Iit FC X Iit-1 CC X Iit CC X Iit-1 -0.255 0.168 1.167 -1.277 0.52 0.54 0.42 0.42 -0.019 -0.071 -0.059 -0.050

IB X Iit IB X Iit-1

Trade size FC X Qjt CC X Qjt Adjusted R2 Observations -0.366 0.221 0.33 1,640 0.59 0.42 -0.151 -0.919 0.33 1,640 -0.645 -0.536 0.33 1,125

IB X Qjt

Table VI. Spread variation across trade sizes and counterparty types
We estimate this equation: Pit = +1Dt + 2Dt-1 + 1Iit + 2Iit-1 + Qjt + t. The dependent variable is the change in price between two successive incoming trades, measured in pips. Dt is an indicator variable picking up the direction of the deal, positive for purchases (at the ask) and negative for sales (at the bid); Iit is the dealer's inventory at time t, and Qjt is order flow measured in millions of euros. These variables are interacted with dummy variables for financial customers (FC) and commercial customers (CC). They are also interacted with dummies for trade size: Lg. = {Qjt [1,)}; Med. = {Qjt [0.5,1)}; Sm. = {Qjt (0,0.5)}. Data include all incoming customer USD/EUR spot and forward trades of a small bank in Germany, except those with preferred customers, over the period July 11, 2001, through November 9, 2001. Estimation uses GMM and Newey-West correction. Significance at 1, 5 and 10 percent levels indicated by , and *, respectively. Estimates of the (negative of the) baseline half spread are highlighted in bold.
Robustness Tests Baseline Regression Coefficient 0.094 10.456 -6.615 3.921 -2.972 2.397 -3.622* 13.329 -12.681 12.618 -7.199 4.682 -2.064 Std. Error 0.31 2.58 2.39 2.69 2.99 2.93 2.02 0.61 0.64 1.56 1.86 2.31 1.76 No Inventories Coefficient 0.174 10.419 -6.935 3.905 -2.930 2.788 -3.100 13.327 -12.729 12.473 -7.161 4.721 -1.715 Spot Trades Only Coefficient 0.799 12.924 -13.236 5.574 -4.679 4.013 -0.065 11.403 -11.100 13.945 -5.607 1.010 0.001 Interbank Trades Included Coefficient -0.272 9.034 -5.420 3.364 -0.895 -0.164 0.343 12.934 -11.469 14.570 -8.492 6.296 -3.189 2.027 -3.757 3.450 -1.122 1.119 -1.180 1.012 -1.097 -0.263 0.198 1.597 0.522 -0.347 0.24 2,848
Constant Direction FC X Dt X Sm. FC X Dt-1 X Sm. FC X Dt X Med. FC X Dt-1 X Med. FC X Dt X Lg. FC X Dt-1 X Lg. CC X Dt X Sm. CC X Dt-1 X Sm. CC X Dt X Med. CC X Dt-1 X Med. CC X Dt X Lg. CC X Dt-1 X Lg. IB X Dt X Med.+Sm. IB X Dt-1 X Med.+Sm. IB X Dt X Lg. IB X Dt-1 X Lg. Inventory FC X Iit FC X Iit-1 CC X Iit CC X Iit-1 IB X Iit IB X Iit-1 Trade size FC X Qjt CC X Qjt IB X Qjt Adjusted R2 Observations
-0.464 0.365 1.052 -1.087

0.59 0.60 0.41 0.42

-0.234 0.169 0.029 -0.036

0.121 0.773* 0.33 1,640

0.73 0.47

0.435 -0.240 0.33 1,640

-0.263 0.311 0.32 1,125

costs and transaction size in their analysis of equity market spreads. We pass over this explanation since it relies on the special properties of block trades. We exclude all trades over $25 million from our regression analyses, so this explanation cannot explain our results. Further, the management of large trades is carried out quite differently in FX than in equity markets.
As interpreted here, asymmetric information has two roles in the Duffie et al. (2004) model. First, dis-
persed/asymmetric information about current prices generates the need to search in OTC markets. Second, information asymmetries determine the agency relationships within customer firms, between management and their traders, that in turn determine whether execution is rewarded.
Strategic dealing may be more relevant in FX than the municipal or corporate bond markets, since most such
bonds trade relatively infrequently so the information value of any trade may be negligible.
This pre-occupation with standard practice may bring to mind the issues of collusion on the NASDAQ raised in
Christie and Schultz (1994). However, since there are literally hundreds of dealers in the major currency pairs, and they are spread across the globe, it seems highly unlikely that collusion could maintain FX spreads for decades.
We are not the first to note that some price discovery happens in the interdealer market (Evans and Lyons 2006),
but to our knowledge we are the first to note that price discovery cannot happen in the customer market, and that therefore all price discovery must happen in the interdealer market.
The choice between limit and market orders will also hinge on market conditions, such as the width of the bid-ask Our conclusion that dealers will place outgoing/market orders after trading with "informed" customers is consis-
spread and the depth of the book (Biais et al. (1995), Goettler et al. (2005), Lo and Sapp (2005)).
tent with the finding of Bloomfield et al. (2005) that informed traders "take (provide) liquidity when the value of their information is high (low)." In their experimental setting information is most valuable when it is new. In FX markets, information is newest right after a dealer trades with an informed customer, which corresponds to the time we suggest the dealer will place the outgoing/market order.
Though it would be ideal to develop a formal model of this price discovery mechanism, space constraints preclude

Johor Bahru

10% off on total bill

Valid till 30 June 2009

More From Your CArd

IMPORTANT

Notification: Amendment to Citibank Card Agreement Terms and Conditions
All cardmembers, kindly note that the following clause has just been added to the Citibank Card Agreement Terms and Conditions. For updated terms and conditions, kindly log on to www.citibank.com.my. For further inquiries, kindly call our 24-hour CitiPhone Banking using the number below: 603- Clause 8: Auto-Billing facilities with Citibank One Bill Merchants
For the purpose of this section: Service shall mean the auto-billing service which you have registered for howsoever in relation to payments due to the Merchant. Merchant shall mean the participating merchants for the Service as from time to time listed in our Website. In the event that you obtain a replacement card for reasons of fraud, replacement of lost, stolen or damaged card, renewal of expiring card or upgrading of existing card, we shall ensure that all instructions for the Service shall be transferred to the replacement card to ensure the non-interruption of the Service. If the replacement Card option is not applicable, we may at its sole and absolute discretion (which discretion shall not be questioned) elect not to make any payment of the said Charges to all or any of the merchant, in which event you shall be responsible for paying the unpaid said Charges directly to the Merchant. You hereby authorize us to disclose the replacement card details to the Merchant from time to time for purposes in relation to providing the Service and expressly consents to such disclosure and confirms and declares that no further consent from you is necessary or required in relation thereto and we shall be under no liability for disclosing such information. This shall constitute the consent required pursuant to Section 99(1)(a) of the Banking and Financial Institutions Act 1989 and any other contractual consent for such disclosures. In consideration of us agreeing to provide the Service, you undertake to indemnify us against all losses, costs, damages, expenses, claims and demands which we may incur or sustain as a result of the provision of the Service. The Service may be terminated by either of us by giving to the other party not less than one months notice in writing or via phone call to our Phone Centre. Termination of the Service shall not terminate the Credit Card Agreement between you and us. In the event the Credit Card Agreement is terminated for whatever reason, the Service and our agreement to make payment to the Merchant under the Service shall immediately terminate. Notwithstanding the Service herein, all terms and conditions existing between the Merchant and you and your obligations therein contained shall continue to be binding between you and the Merchant.

MARC H 9

world privileges

Malaysia and Abroad

Taman Molek, 1803 Jalan Sutera, Taman Sentosa 6396 Jalan Kuning, Taman Pelangi 1962 Modern Revelation
Min spend of RM100 Not valid on eve of and day of public holiday(s) Not valid for alcoholic beverages and tobacco
Spread the love with big savings!

10% off on la carte only

Amarin Western & Thai Restaurant

Taman Molek % 3373

Not valid for alcoholic beverages. Valid for dine-in only Not valid for desserts and drinks

Matterhorn Bistro

Buy 1 get 1 Free for all food items
Your account information is just an SMS away with Citibank Alerting Service
With Citibank Alerting Service, you can check your credit card available spending balance, latest payment due date, statement balance and more, whenever you want it with just a simple SMS.
during lunch hour (12pm-3pm)
25% off on la carte for Platinum Card only 15% off on la carte on total food and non-alcoholic beverages (for all cards)

How it works

To check your credit card latest payment due date, statement balance and minimum amount due SMS DUE<space><Last four digits of credit card number> and send to 36700

Example: Send See Reply

To check your credit card available spending balance: SMS BAL<space><Last four digits of credit card number> and send to 36700
Pamper yourself and your loved ones with irresistible bargains.
Any purchase of RM500 and above?
Just convert to Citibank FlexiPayment Plan and pay from RM18 per month. Call 03-2383 3955

Taman Johor Jaya % 2288

10% off on baby products
Taman Nusa Bestari 2 Skudai % 1050 Sutera Mall 1 Skudai % 9460
Not valid for milk powder, diapers, hampers and best buy items
You can also choose to receive SMS and email alerts when there is a specific activity on your credit card accounts. Simply login and register for these free alerts at www.citibank.com.my
Standard Telco SMS charges apply for requests sent to 36700. The mobile number and last 4 digits of credit card number must match the Banks records for successful retrieval of account information. You will not be charged for receiving these alerts.
Valid with Citibank credit card Not valid with on-going promotions Terms and conditions apply For more details, visit citibank.com.my
Guaranteed Cash Back Promotion RM2,200,000
cash back to be given out.

HEALTH & Beauty

20% off on normal priced services:
ero embroidery (RM680) ebrow embroidery (RM450) eliner embroidery (RM280) elips embroidery (RM800) laser tattoo removal (RM400 RM1,000)

Valid till 31 May 2009

CITIBANK FLEXI PAYMENT PLAN (FPP)
Affordability or flexibility? Enjoy both with Citibank FPP. You dont just get to choose the monthly repayment amount, but also the repayment period. Now, make any purchase from anywhere around the world and pay for it by affordable monthly instalments with just a phone call. Minimum purchase amount RM500 per transaction Instalment rate of 9.88% per annum Flexible tenures available
Heres an example of how FPP works: Monthly Repayment Purchase Amount (RM) 12 months 18 months 24 months 30 months 21 1,42 2,83 5,208 10,months 360

Desa Sri Hartamas % 1300 Mid Valley % 03 - 111 Jusco Kinta City Shopping Centre % 05 - 5454 333
Choose any one treatment below at only RM79 (worth RM300) and get Free 1 Lymphatic Drainage Full Body Massage worth RM98
Crystal Facial Treatment (RM300) OR Ultraslim Body Treatment (RM300) OR Wonder Push Up Bust Treatment (RM300)
Mid Valley City % 03 - Subang, Taipan % 03-5633 3633

How to activate FPP?

1. Make purchase of at least RM500 per transaction. 2. After your purchase or when you receive your statement (before your payment due date), select the purchase you wish to convert to FPP and decide on the repayment tenure. 3. Call 03 - anytime, any day to activate your FPP. 4. No documentation required. And its done! Your first instalment will be shown in your next statement. Terms and conditions apply. Please refer to citibank.com.my
No slogan, no contest. Spend and get cash back, guaranteed.
From now till 15 April 2009 the more you use your Citibank credit card, the more cash you earn. This is in addition to the existing Rewards points or cash rebates earned with your Citibank credit card. Heres how you can get even more out of your ringgit:
(KKLIU number: 1424/2008/I)
Enjoy exclusive rates available only for Citibank credit cardmembers when you go for your health checks at HSC Medical Center:

HSC DIAGNOSTIC PACKAGES

Package 1 Executive

FEMALE

Package 2 Heart RM 1,560 1,760
Package 3 Heart & Cancer RM 2,400 2,600
Package 4 Heart & Cancer & Bone RM 2,500 2,700
Package 5 Comprehensive RM 3,050 3,250

RM 920 1,120

Bank at your own convenience with
CitiPhone Express Self Service Phone Banking
Call our 24-hour CitiPhone Banking using the number below: 03 - (Kuala Lumpur), 0000 (Penang), 0000 (Johor) Check out what else Self Service Phone Banking can offer!
With a Telephone Personal Identification Number (TPIN), you can: Perform transfers and payment within your own accounts Check recent transaction details Request for statements and more

REGISTER SPEND

SMS GCB4<space>Your 16-digit credit card number to 36700 RM50 or more in a single receipt: 5X a month per 8X a month per principal card principal card RM20 CASH BACK RM10 CASH BACK

% 03-2712 0866

E-mail: info@hsc.com.my
Diagnostic packages 1 to 5 are available at HSC Medical Center
For more information, log on to citibank.com.my
Campaign tracking period: Month 1 (15 Jan 2009 to 14 Feb 2009), Month 2 (15 Feb 2009 to 14 Mar 2009), Month 3 (15 Mar 2009 to 15 April 2009). The cost of each SMS is 30 sen and will be borne by the participants. You will receive a confirmation SMS response from us. Maximum cash back per month per principal card is RM20.
Principal Citibank Platinum, Gold, Silver, Clear, Choice, CitiBusiness, Cash Back, Celcom and AirAsia credit cardmembers who are residents of Malaysia are eligible to participate in this Promotion. Qualifying Retail Transaction refers to retail purchases both local and international and new Easy Payment Plan (but not instalment) of a minimum value of RM50 and above per retail transaction. Split Qualifying Retail Transactions are disallowed and shall be disqualified. Cardmembers with multiple Citibank credit cards are only required to register one card. All applicable cards shall be automatically tracked for the purposes of tabulation of the Qualifying Retail Transactions. The Qualifying Retail Transactions from the Participants applicable Citibank credit card accounts shall be fulfilled to the Participants individual Citibank credit card account within six (6) to eight (8) weeks upon the end of each tracking month throughout the Promotion Period. Only a maximum total worth of RM2.2 million cash back is available for this Promotion. Other terms and conditions apply.
Get 10% off tickets to the musical masterpiece Cats, exclusively for all Citibank cardmembers only!
DATE: 10 April 3 May 2009 Venue: Esplanade Theatre, Singapore
Showtimes Tues Thurs (8pm), Sun (7pm) 14 Apr Gala Night (8pm), Fri & Sat (8pm) and Sat & Sun matinee (2pm) Note: Prices shown are after discount Cat 345 Cat 300 Price (RM) Cat 3 Cat 199 Cat 345 Cat 300
Rewards Redemption & Inquiries
Language selection, press 1. English 2. Malay 3. Mandarin Press 1 Press 5 for Rewards Redemption & Inquiries
Key in Credit Card Number

Do not have a TPIN?

Speak to our friendly CitiPhone officers. For assistance from our CitiPhone officers at any point of time, press 0
to key in DOB in the order of DD/MM/YY
To book your tickets and hotel accommodation now, please contact % 1850 (KL) or 8803 (Penang).
Only valid through walk-in or phone-in purchases through Holiday Tours only Price includes RM7.50 SISTIC booking fee.

Current Rewards Points Balance Perform Redemption
Perform rewards redemption in 4 simple steps!
10% off on total food and beverage bill

Dining

30% off on la carte (food only) 15% off on wine by glass
Ajisen Japanese Restaurant
Batu Pahat % 4717 Taman Molek % 8543 Sutera Mall % 9917
Min. spend of RM50 in a single receipt Valid for dine-in only
(20 wines & champagnes by glass to choose from)

Valid till 31 May 2009

Hakka Repubic
Menara Hap Seng % 03 - 2078 9908
Superior Room @ RM160++ Deluxe Room @ RM190++

Valid till 31 Dec 2009

Buffet Lunch & Dinner :
Taman Century, Johor Bahru % 3800
Valid on Fri Sun only Not valid on Sept 2009

group of restaurants

RM58++ for adult (RM68++) RM25++ for children (RM30++)

Valid till 30 Apr 2009

Subang Parade % 8766 One Utama % 3180 Valid for dine-in only Not valid on eve of and day of public holiday(s)
10% off on food and beverage
Jalan Harimau Tarum, Taman Abad, Johor Bahru % 4405
Not valid during happy hours (3pm 9pm) Valid for dine-in only Min spend of RM100
50% off on selected items (Valid till 30 Apr 2009) 30% off on selected items (Valid from 1 May till 31 May 2009)
50% off on half & full leather sofa Additional 10% off on promotion items Free 2 Easy Pillows (worth RM1,196)

Jalan Ampang % 2710

Not valid on eve of and day of public holiday(s)
for any purchase of ISAIAH ORGANIC Mattress

20% off on Sunset Dining

Cruise packages: Love & Romance (per couple) Enjoy A Moment (3-6 pax) Sunset Party (7-10 pax)
Taman Johor Jaya, Johor Bahru % 1300

Valid for JB outlet only

60% off on published room rates Free upgrade to next level of room
category (max upgrade up to Deluxe Room only)
20% off on Massage Cruise packages: Stress Relief (per couple) Stay Vital
15% off on total food bill at Checkers Cafe, Kapitan Corner & DBar

Valid till 31 Dec 2009

20% off on DME Cruise: Customise your personal/companys special occasion needs
Jalan Masai Lama, Mukim Plentong % 1000 www.dorsettjohor.com
Subject to room availability An upgrade to the Business Suite King room category is not applicable for this promotion. Advance reservation is required For F & B: not applicable for 10% Service Charge & 5% Government Tax

% 1818

www.minescruise.com
Discount not applicable on public holidays Booking request based on availability 2 weeks in advance of booking is required Offer is not applicable on Kids Menu
20% off on food & beverage with min spend Buy 1 Free 1 for selected pasta & risotto in

Penang & Langkawi

Upon Consultation: Free Skin Analysis & Body Fat analysis
Upon Enrolment: 10% off on products, 20% off on 1 facial
treatment, 30% off on 1 SPA body treatment, 40% off on 1 body slimming & reshaping & 50% off on 1st trial
of RM120 Citibank Privileges Menu (Valid from 12pm - 3pm)
Solaris, Mont Kiara % 03 - 6203 6887
Get Mystery gift upon enrolment
Penang Larut Road % 04-/Bayan Point % 04-Butterworth Raja Uda % 04-Kedah Alor Setar % 04-Perak Parit Buntar % 05-717 1002
Valid at all Wei Wei Beauty & Slimming Specialist outlets in Penang, Kedah & Perak
30% off on buffet lunch & buffet dinner (food only) at Eccucino

Special Room Rates:

Superior Room @ RM165nett Deluxe room @ RM205nett Executive Deluxe Room @ RM285nett per room per night inclusive breakfast for two (Extra Bed @ RM70nett with 1 breakfast)
20% off on food & beverage items at PALMS Coffee House

% 5999

A surcharge of RM60nett per room per night shall be imposed during the following peak period dates: eve of & day of public holiday(s) & 22 - 31 Dec 2009 Not applicable during festive promotions & Happy Hours Not applicable for tobacco, alcoholic beverages, mini bar and room service
30% off on lunch & dinner (food only) at 20% off on beverages at Tai Zi Heen,
Tai Zi Heen & ENJU Eccucino, ENJU & Mezzanine Lounge
Premier Executive Room Special Rate at RM485++ per room per night inclusive of Premier Executive Privileges (Fri-Sun only)

Valid till 30 Dec 2009

20% off on food & beverage at The Islander & Lobby Lounge 20% off on annual membership enrolment & 10% off on massage at Health Club
Deluxe category @ RM170++ per room per night (valid till 29 Mar 2009 only)

% 8888

% 2622
Beverage discount applies for standard pouring wines only (excluding premium wines) Not valid on eve of and day of public holiday(s) and special occasions Not applicable for takeaways

Complimentary 2nd night stay when you
stay for 1 night (valid for room & weekdays only)
Valid till 30 June 2009 Langkawi Boutique Hotel

% 0495 % 03-7728 3007

www.eagleranch.com.my
Premier Deluxe @ RM120nett per room per night inclusive buffet breakfast for 2 pax Family Deluxe @ RM160nett per room per night inclusive buffet breakfast for 4 pax

Valid till 30 June 2009

Not applicable for any packages

% 04-955 7778

Not applicable during eve of and day of public holiday(s) *Not valid for Basic & Deluxe Family Packages

Penang

Free DVD Player (worth RM189) with any purchase of 32 LCD TV from Toshiba, Panasonic, LG & Sharp @ RM1,899 Free basic installation with any purchase of Haier 1HP Air Conditioner @ RM849
Anson Road % 9880 Bukit Jambul % 0280 Jelutong % 2880 Farlim % 2880 Gurney Plaza % 2880
Executive Deluxe Room @ RM263++ (RM313++) inclusive of buffet breakfast for 2 pax
30% off on buffet lunch/dinner at Di-Atas Brasserie (Mon Fri) 30% off on la carte menu (Tues Fri) and buffet dinner (Thu Fri) at Gen Japanese Restaurant
Free Casing with any purchase of loose
diamonds (size 0.30ct & above)

The Legend Hotel

% 04 - 228 2833
Subject to availability of casing designs
20% off on la carte and set menus at Museum Chinese Restaurant 20% off on food and beverage at The Monkey Bar (Not applicable during happy hours)
20% off on total bill with min spend

% 03-4042 9888

Seasons

Grand Seasons Hotel

of RM100 & above in a single receipt (Wed only)
10% off on total bill with min spend of RM50 & above in a single receipt (Mon Tues & Thurs Fri)
Crest @ RM243++ (RM302++) inclusive of buffet breakfast for 2 pax
Shanghai Ding House of Dumpling
20% off on buffet lunch/dinner at Seasons Caf & OLas (valid till 31 May 2009 only)

% 03-2697 8888

Bayan Bay

% 1644

Not applicable during weekends, festive promo, eve of and day of public holiday(s)
Deluxe room @ RM205++ (RM218++) inclusive of buffet breakfast for 2 pax

% 09 - 581 9818

The Legend Resort, Cherating
Surcharge applies during peakperiods
50% off on published room rates

(normal period)

40% off on published room rates (peak period)
Premium Water Chalet @ RM380++ (RM420++) inclusive of buffet breakfast for 2 pax

% 06 - 653 2000

The Legend Water Chalets, Port Dickson
15% off on la carte items at Terrace

Bay Restaurant

% 3333
Not applicable during eve of and day of public holiday(s) & festive promo
All offers above are valid till 31 Aug 2009 Rates are not valid for Group bookings, M.I.C.E and Special Events Confirmation is subject to Room Availability

Shopping

15% off
Valid till 31 Dec 2009 Kelana Square, Kelana Jaya % 0887 www.flowers.com.my

HOME Shopping

Shop from the comfort of your home!

BENEFITS

Great savings up to 50% Enjoy 0% easy pay up to 12 months (applicable for accumulated purchases of min RM500 and above) Select from over 2,000 products exclusively chosen to delight you

15% off on normal priced

merchandise
Valid till 31 Mar 2009 Valid at all Blush outlets excluding Genting, Penang and Kota Kinabalu outlet % 3066 www.blush.com.my
To order or to view the latest products:
Step 1 : Log on to citibank.com.my Step 2 : Select All Promotions (link featured on main homepage) Step 3 : Look for Home Shopping

10% off

Valid till 31 Dec 2009 Valid at all Bonita outlets % 8818
Valid till 31 Dec 2009 Lot 10 % 03 - The Gardens % 03 - 2283 4218
Nokia 8800 Sapphire Arte (Free 1 GB Memory Card) Member price: RM4,600 (RM4988) Tactile surface cloaked in leather cover with sapphire navigation key Easy Tap-for-time function to display time and missed events Easy Turn-to-mute function to gracefully silence incoming calls and alarms Ambient light sensor adjusts the brightness of the screen according to its surroundings to provide a vibrant display of light and contrast Living wallpapers provides unique decoration View your pictures on the brilliant, 2 OLED QVGA display, supporting up to 16-million colours LG KS20 (Free 1 GB Memory Card) Member price: RM1,699 (RM1,799) Windows Mobile 6.0, WIFI, 3.5G (HSDPA) 2.0 Megapixel Camera (Autofocus) MP3, Bluetooth, 128MB Built in Micro SD Card Slot Pentium 2 - 400 Mhz Fully Touch Screen PDA Phone Sony Ericsson W890i (3G) Member price: RM960 (RM1,099) with 1GB M2 Memory Card 3.2 megapixel camera Slick 9.6mm Faster HSDPA connection Walkman 3.0, SenseMe FM Radio Bon Chef 16cm Saucepan with Glass Lid Member price: RM65 (RM124.90) Material: Teflon classic non-stick Size: 16cm diameter

Vviva 24cm Frypan Member price: RM45 (RM89.90) Material: Teflon classic non-stick Size: 24cm diameter Camel Active 20 Cabin Bag

(PKL 511520)

Member price: RM199 (RM399) Telescopic handle for easy manoeuvring High performance woven polyester resists tearing & scuffing Combination Lock system with double lock head sliders for extra security Light weight mould-panel technology for easy handling Reinforced stitching for durability Giordano Computer Backpack

(PC-5018)

Member price: RM150 (RM230) Material: 600D Polyester with PVC backing Size: 31 x 42 x 10 cm O.D.M To Be Young Watch (DD100-1) Member price: RM338 (RM399) Plastic case Display description: 3 rotating discs Black & White silicone strap Water resistant up to 30m O.D.M To Be Young Watch (DD100-8) Member price: RM338 (RM399) Plastic case Display description: 3 rotating discs Yellow & White silicone strap Water resistant up to 30m Endo 28cm 3-tier stainless steel steamer + cover (E-S283T) Member price: RM150 (RM228) High-quality stainless steel material Fine stream-vents (can be used to steam & cook rice) Large, broad belly-shaped base

10% off on normal

priced merchandise
Valid till 31 Dec 2009 Mid Valley Megamall % 3002 The Gardens % 1188
Valid till 31 Dec 2009 Dataran Mentari, Bandar Sunway PJ % 03- Jalan SS2/75, PJ % 03 - www.keepgallery.com
Promotion ends 31 Mar 2009 All products are subject to availability online Valid with Citibank credit card Not valid with on-going promotions Terms and conditions apply For more details, visit citibank.com.my

Senheng/senQ

Special LG Deals at Senheng/senQ Digital Station
32 LCD TV Model: LG-32LG80UR

RCP: RM2,099 SAVE RM100

15% off on normal priced items
Valid till 30 June 2009 Suria KLCC % 9600
SBS 581L Model: LG-GRR207WTC
RCP: RM4,799 SAVE RM150 Free Gift: 10-piece Kitchen Utensil Set (FG-KITCHEN/U10(LG))
32 Full HD LCD TV Model: LG-32LG53FR
RCP: RM2,499 SAVE RM50 Free Gift: DVD Player (LG-DV350)

% 03-8023 3939

Royal Doulton
Suria KLCC Bangsar Village 2
Washing Machine 9.5KG Model: LG-WFT950
RCP: RM1,299 SAVE RM100 Free Gift:3-piece Elegant Stainless Steel BBQ Tool Set & 2-piece Tempered Glass Plate Set (FG-BBQ/ Toolset (LG)& FG-G. PLATE/S2 (LG))

House of Presentation:

Bangsar Village Ikano Power Center Solaris Mont Kiara
42 Plasma TV Model: LG-42PG10R

RCP: RM3,499 SAVE RM500

Brabantia

Ikano Power Center

Kitchen Shop
Bangsar Village 2 Tropicana City Mall Solaris Mont Kiara
Portable DVD Player Model: LG-DP351

RCP: RM488 SAVE RM39

BBQ King
Ikano Power Center Bangsar Village Pavilion KL Solaris Mont Kiara
Air Conditioner 1HP Model: LG-G10LE
RCP: RM950 SAVE RM51 Free Gift: 1-piece Stainless Steel Cooking Pot (FG-C/POT(LG))
Home Theater System Model: LG-HT353SD

RCP: RM499 SAVE RM50

Additional 10% off on sale items
Valid till 5 Apr 2009 Valid at all Hush Puppies and Obermain outlets % 1119
Fridge 460L Model: LG-GRB492YLC
RCP: RM1,699 SAVE RM100 Free Gift: 3-piece Elegant Stainless Steel BBQ Tool Set & 2-piece Tempered Glass Plate Set (FG-BBQ / Toolset (LG) & FG-G. PLATE/S2(LG))
Purchase any LG product worth RM1,999 and buy a Home Theater System (LG-HT353SD) @ RM249 (RCP: RM499 SAVE RM250)

*While stocks last

RM150 off CARs 2-Year Membership (Normal price: RM750)* RM35 off CARs Northern 2-Year Membership (Normal price: RM535). Free 2nd car number registration worth RM100**

Valid till 31 July 2009

Win a trip to JAPAN Universal Studio (20 grand prizes) or a 40 Sony Bravia LCD TV (10 prizes), PLUS get instant exclusive prizes when you purchase at any Senheng/senQ today. 3X winning chances for Citibank credit cardmembers!

% 1838

*Applicable for Klang Valley only **Applicable for Nothern Region only

% 03 - 9281 4040

Prices shown are before discount

EASY PAYMENT PLAN

Eee PC 900H (EPP: RM116.58 x 12 mths):
Additional 10% off on normal priced merchandise
8.9 Screen Intel Mobile CPU 1 GB Memory 160GB 802.11BG, 10/100 LAN 4 cell battery with 6 months warranty Windows XP OS
Free ASUS mouse & 2GB thumbdrive Free Delivery
Eee PC 900H 2 GB thumbdrive

Limited stocks available

Valid at all Rofina outlets in Penang, Kedah, Perak and KL % 6567 Cosas United: Gurney Plaza % 9223
Eee PC 1000H (EPP: RM 141.58 x 12 mths):
Eee PC 1000H 2 GB thumbdrive
10 Screen Atom Processor 1 GB Memory 160 GB 802.11 BG, 10/100 LAN 6 cell battery with 6 months warranty Windows XP OS

Spend RM2,500 & above and get: Additional 10% off on storewide discounts Free Delivery within Klang Valley 1 Complimentary Barang Barang Loyalty Card
Free ASUS mouse & 2 GB thumbdrive Free Delivery Eee PC S101H (EPP: RM183.25 x 12 mths):
10.2 Slim Atom Processor 1 GB Memory 160 GB HDD 802.11 BG, 10/100 LAN Bluetooth 4 cell battery with 6 months warranty Windows XP
Eee PC S101H Epson Stylus T10 Printer
Free Epson Stylus T10 Printer Free Delivery
Valid till 31 May 2009 To subscribe call % 03-ext 237 / 203 / 209
Valid till 30 Apr 2009 Great Eastern Mall % 03 - Ikano Power Centre % 03 - 7726 4198
Promotion is not valid for controlled price & star buy items, customised orders, misc. charges (disposal, storage, delivery), itemsabove 60% off and cannot be used in conjuction with any other privileges and vouchers unless otherwise stated
Free PC when you subscribe to Streamyx 1.0 Mbps (EPP: RM99 x 24mths)
Buy Calypso Sofa @ RM3,188 (RM9,050) & get FREE Calypso coffee table Beatriz Sofa @ RM2,188
60% off on coffee tables & coffee side tables upon purchase of selected sofas
Valid till 31 May 2009 Mid Valley Megamall % 03 - Subang Parade % 03 - The Curve % 03 - 7725 4776

First 100 customers get Ximplify 10GB Free Storage Unlimited Streamyx 1.0 Mbps access Modem Compaq Presario CQ 2000 Desktop - Intel Atom Processor 330 - Genuine Windows Vista Basic - 1GB DDR2 SDRAM Memory - 160GB HDD - DVD +/- RW Drive - Intergrated LAN - 15 LCD Display
RM139 notebook package available as well
Valid till 30 Apr 2009 To subscribe/enquiries call % 9799
Delivery chargesofRM50 for Peninsular Malaysia and RM175 for East Malaysia Delivery of PC requires at least 14 working days

The Beatriz