Caplin’s ‘award winning technology’ helping regional banks accelerate delivery of SDPs


We have discussed before how regional (commercial) banks have been ‘upping their game’, investing in talented e-commerce people, enhancing their back-end pricing technology and importantly investing in new client facing single-dealer platforms (SDPs).

As a result of this focused investment, regional banks have been steadily gaining market share, sometimes at the expense of the large global banks as they deliver ever greater value to their client franchise through their SDPs.

This trend can be clearly seen in the chart below Continue reading

FICC broken business model? Barclays down.


Further evidence that the FICC business model of investment banks appears to be ‘broken’ came today with Barclays announcing a 41% decline in FICC revenue.

By contrast UBS, who also reported today, and who for the past two years have been scaling back much of their FICC business reported a small 8% drop in FICC revenues compared to Q1 2013. With its Investor Client Services (ICS) group (slide 12 in the results), which includes Fixed Income, FX rates and credits, showing a very impressive 30% increase on 4th quarter 2013.

The confluence of regulatory changes coming from Dodd Frank and EMIR as well as the increased capital costs under Basle and the ban on proprietary trading imposed by Volcker rules, have resulted in investment banks recalibrating their operating models. Many are pulling back from or ceasing to operate in capital-intensive businesses.

As a result, banks like Continue reading

Danske Bank launches new SDP


Danske Bank has launched a new Single-dealer platform, and joins the growing rank of regional banks investing in SDPs designed to protect and grow their client franchises, by creating a strongly branded client-centric ‘relationship channel’ for their clients.

According to EuroMoney’s 2013 FX league tables, Danske are ranked 22nd globally, and according to Danske’s website are the top ranked FX bank in Scandanavia.

The new FX single-dealer platform called Danske OneTrader , is aimed at their corporate and institutional clients, and was unveiled last month at the ACI conference in Berlin.

Talk of the new platform came just over a year ago when Continue reading

Deutsche partners with FIREapps and how SDPs can help


Deeper the insight a bank has into their corporate customers cash-flows and exposures the better the FX hedging solutions they can provide. However, even large multinational corporates often struggle to identify exposures in a timely manner.

So it’s interesting to see that Deutsche bank the global leader in FX has partnered with FIREapps to provide customers with solutions that identify and manage their overall currency exposures. FIREapps integrates with customers enterprise resource planning (ERP) systems, and Deutsche integrates with FIREapps.

According to Fabio Madar, Global Head of Corporate FX Sales at FIREapps:

Continue reading

Regional Banks investing in SDPs


We have discussed here a number of times how regional (commercial) banks have been ‘upping their game’, and investing in talented e-commerce people, better back-end pricing technology and importantly investing in new client facing single-dealer platforms (SDPs).

This investment enables the regional banks to better service their commercial clients and provide differentiated ‘workflow’ based solutions, that not only protects, but has been instrumental to them growing their client franchise, and gaining market share at the expense of the top global FX banks.

So, it’s interesting to see this theme is being picked up by Continue reading

Internalisation of FX flows


Earlier this week I looked at how the adoption of eFX was accelerating and commented on the huge increase in the e-FX ratios at RBS in particular, which has risen from 8% of flows being electronic in 2010 to some 53% in 2013. A whopping 511% increase in their e-FX ratios.

So, it’s interesting to see in today’s FX week an article talking about how RBS is now ‘internalising’ upwards of Continue reading

Value vs cost of FX liquidity provision


Interesting article in FX Week, about banks pulling their liquidity provision back from a number of multi-bank platforms due to the high cost fee structures on those platforms.

According to Kurt Vom Scheidt, COO of Markets in Saxo Bank, speaking on a conference panel at FX Invest Europe in Frankfurt…

“With banks struggling to make adequate returns across the board, connections to expensive trading platforms are on the chopping board”

He further commented that…. Continue reading

BofE FX Survey data: $2,234bln/day (12% down from Apr, but 11% up YonY) – worth reading


The Bank of England today released their latest semi-annual FX turnover survey results for October 2013.

Highlights on overall London FX volumes

  • Total FX vols down 12% since Apr at $2,234bln/day (up 11% YoY)
  • FX Swaps account for 50% of total FX vols (up from 42% in Apr), highest share since Apr 09
  • FX Spot account for 34% of total FX vols (down from 39% in Apr), lowest share since Apr 09
  • Spot FX vol down 24% from Apr at 767bln/day (5% higher YoY)
  • Spot USD/JPY vols 48% lower than Apr at $119bln/day (still 2nd most traded curr pair)

Execution via Multi-Dealer Platforms (MDP) and Single-Dealer Platforms (SDPs) both down approx 9% since Apr

  • SDP vols – 9% (still up 21% YoY), driven by +31% increase in use by Reporting Dealers and +14% by other banks
  • MDP vols -10% (up 53% YoY), driven by +77% rise in Non-Bank Financial Institutions

Detailed analysis and charts on the figures follows below. Continue reading

Reduced Liquidity driving eTrading in Coporate Bonds


McKinsey and Greenwich Associates have produced a joint report on the challenges for the corporate bond market as it transitions from a capital intensive inventory based model to what they refer to as a ‘capital-light’ agency model, where broker-dealers hold less inventory.

The report discusses how broker-dealers will need to leverage e-trading technology far more to assist their clients in liquidity discovery and help them with trade execution, as it has become increasingly difficult to find the ‘other side of the trade’.

Continue reading

The anatomy of the global FX market (BIS research findings)


The Bank of International Settlements (BIS), has just released a in-depth analysis of the recently released 2013 Triennial FX Survey, looking at the changing structure of the FX market, and drawing some conclusions.

Some of this was covered in our recent coverage of the 2013 Triennial FX Survey, some of the key points of which are shown here, but worth reading the report in full.

  • Non-dealer financial institutions were the major drivers of FX turnover (much through the use of prime brokers)
  • The reporting dealer market, by contrast, has grown more slowly (partly due to internalisation of flow by top tier banks), and
  • Trading volume of non-financials (mostly corporates) has actually contracted
  • In today’s market structure, electronic trading dominates. It is the preferred trading channel, with a share above 50% for all customer segments.
  • Non-financial institutions mostly prefer direct contact with their relationship bank, either via the phone or via a single-bank platform.
  • Financial customers are less loyal to their dealer often trade either directly with dealers electronically direct electronic price streams), or indirectly via multi-bank platforms and electronic brokerage systems that were previously the exclusive venues of inter-dealer trading
  • Retail accounts for some 3.5-3.8% of daily FX volumes

The climb in FX turnover between 2010 and 2013 appears to have been mostly Continue reading

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