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This has been the year of regulation, with the birth of the SEF, introduction of clearing/reporting mandates, and next year the move to mandatory trading, with the introduction of MAT rules. And only last week, the final version of the rules governing proprietary trading, the so-called ‘Volcker Rules‘. All of which has been a huge burden for banks and vendors as they prepare the connectivity required to support their clients.

It has also been the year that has seen banks re-examine their business models, in the face of higher regulatory capital costs, and in some cases, pull back from more capital-intensive operations such as corporate bonds, and for certain products move from principal to an agency execution model.

However, despite the regulatory drive, bank’s are still investing in their client facing offerings, and are continuing to evolve and enhance their single-dealer platforms, ensuring they remain relevant to clients, and continue as the premier relationship channel, and conduit through which they service their client franchises.

The FX market has continued to grow, and latest BIS triennial survey data reported daily FX vols up 34% to a new record of $5,345bln/day. The global ‘FX flow monsters’ continue to dominate the EuroMoney 2013 FX Bank rankings with Deutsche Bank retaining pole position for an astonishing 9th consecutive year.

Yet, despite their huge investment and innovation, Deutsche’s market share has been steadily declining (down 4% since 2007), whilst #2 placed Citi, has made strong gains over the same period (+5.9% since 2007).

Chart above contrasts Deutsche and Citi, showing the dramatic rise in Citi’s FX market share. The contrast between Deutsche and Citi has seen even more dramatically when we look at the near doubling of Citi’s market share between 2008 and 2013, and the corresponding 30% fall in Deutsche’s share over the same period.

Chart above shows the change in market share of the super regional banks who have upped their game, as they continue to invest in their single-dealer platforms, in order to protect and grow their regional client franchises.

We will take a look at some themes that we see becoming important next year, shortly.

Filed under: Web trading technology |