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Know Your Customer: The Tesco Example

Posted on October 18, 2011 by Scott McLeod

I’m working on some new tools for Caplin Trader that will help banks better understand their customers.

Watchlist

Detailed knowledge of client behaviour is vital for any bank operating in a competitive environment. From a client’s perspective, the bank should understand what the client does, why they do it, and most important how to help them stay in business. Reports I have seen indicate that banks have some work to do to address client expectations in this area.

As part of the research, I thought I would investigate the market leader in understanding client behaviour, i.e., Tesco. I would recommend anyone interested in this topic read the interview with Clive Humby here.

Themes to be drawn from Tesco’s experience Continue reading →

Filed under: Web trading technology | Tagged: CRM, SBP, SDP | 1 Comment »

CDS research from FRBNY

Posted on October 3, 2011 by Scott McLeod

Last week the Federal Reserve Bank of New York published some detailed research on traded volumes of CDS in May-Sep 2010. Some analysis I saw in the WSJ reinforced our earlier views that the traded volume is *extremely* thin & therefore the rationale of a forced multi-dealer trading facility, i.e., SEF, is tenuous at best.

Further analysis by the FT Alphaville team is here. Have a look – you may be surprised!

Filed under: Dodd Frank, MDP, OTC, Regulation, SEF, Single-Dealer Platforms, Survey Results, Web trading technology | Tagged: cds, SDP, SEF | Leave a comment »

Will top FX banks continue to lose market share to regional banks

Posted on July 22, 2011 by Paul Blank

The FX technology arms race continues unabated, with the top banks jockeying for position in the global FX rankings.

Leading banks in the global FX business are highly innovative, with a deep understanding of their clients risk management requirements. They also have the ‘luxury of large budgets’ and correspondingly large and talented in-house technical competence required to develop and deploy highly sophisticated functionality spanning the full trade life cycle from pre-trade, execution, through to rich post trade reporting tools targeted to specific client segments.

It’s also the case, that Continue reading →

Filed under: BIS, FX, Single-Dealer Platforms, Survey Results | Tagged: BIS, Euromoney, FX, Ranking, SDP | 4 Comments »

Single-dealer platforms and TCA

Posted on July 19, 2011 by Scott McLeod

While the notion of Transaction Cost Analysis has been broadly adopted by the equity markets, it doesn’t have similar adoption in the OTC world. Why is this so? I will attempt to explain the various factors that are driving this extremely important topic.

TCA adoption in the equities world

As the equity markets became more fragmented (chiefly as a desire from the politicians/regulators to encourage more competition amongst exchanges), investment managers (IM) demanded more information from the execution brokers as to how & where the brokers chose to execute trades done on behalf of the IM.

Provision of a metric or series of metrics allowed the IMs to calculate their broker’s execution performance. Originally this was via factors such as VWAP or implementation shortfall.

As execution algorithms became widely adopted, other factors were added to measure the algo performance across lit, dark & internal execution venues. In addition, the regulatory focus on best execution meant that TCA could provide an important measure of best ex. You cannot control a cost unless you can measure it.

FI & FX

In the meantime, the FI & FX markets were developing their own transaction models such as ESP, RFS & RFQ.

Continue reading →

Filed under: FX, Internalisation, MiFid, OTC, Single-Dealer Platforms, TCA, Web trading technology | Tagged: SDP, TCA | 5 Comments »

Celent report on Technology Systems in the Global FX Market: May 2011

Posted on June 28, 2011 by Paul Blank

Celent research report on Technology Systems in the Global FX Market

Extract from the report…

Single-dealer platforms (SDPs) are gaining popularity, and this is mainly related to banks’ technology investments. SDPs are providing greater speed and reliability of trade execution, because they create fewer hops from execution and low-latency technology. In addition to research and analytics, SDP clients are also benefiting from superior post-trade processing capabilities and STP solutions that the banks are offering.

Filed under: FX, Single-Dealer Platforms, Survey Results, Technology Trends | Tagged: FX, SDP | Leave a comment »

Single-Dealer Platforms grow in importance

Posted on June 8, 2011 by Mike Hill

It is interesting that, following Paul Blank’s post on May 29th suggesting that single-dealer platforms are fighting back against SEFs, the audience at yesterday’s Waters webcast seemed to agree.

Yesterday (June 7 2011) Waters hosted an audio webcast entitled, “Regulation and OTC e-Commerce: Future-proofing your systems”. Sponsored by Caplin Systems, and hosted by Rob Daly, editor of Waters’ publication Sell-Side Technology, the panel for the webcast included Stéphane Malrait of Société Generale, David Bullen of Citi and Nick Green of Crédit Agricole.

The first audience participation question was, “Do you see a direct electronic channel to market being 1) more or 2) less important in this new regulatory environment?”

82% of the audience decided that in the new regulatory environment a direct electronic channel to market will be MORE important than it is now.

This is clearly good news for those of us engaged in building electronic channels to market for broker/dealers.

For those who missed it, an on-demand recording of the full audio webcast will be available online in a week or so. As soon as it’s available I’ll post the link.

Filed under: Dodd Frank, Mike Hill, Regulation, SEF, Single-Dealer Platforms, Web trading technology | Tagged: audience poll, channel to market, e-commerce, regulation, SDP, SEF, single-dealer platform | Leave a comment »

Reuters launches hosted FX Aggregation service (using Aegisoft)

Posted on May 16, 2011 by Paul Blank

Following the acquisition last year of Aegisoft, Reuters has now released a hosted FX liquidity aggregation and algorithmic execution enhancement capability for FX.

A welcome addition to the Reuters RET product suite.

It will be interesting to see to what extent Reuters ‘opens this up’, Continue reading →

Filed under: FX, Rich Internet Applications, Single-Dealer Platforms | Tagged: FX, RIA, SDP, single-dealer platform | 1 Comment »

Dodd-Frank: Where have we got to so far?

Posted on May 13, 2011 by Scott McLeod

As part of our review & assessment of Dodd-Frank, I thought it would be useful to summarise progress to date & try to draw some conclusions about the speed & direction of the implementation.
Continue reading →

Filed under: Dodd Frank, FX, MiFid, Regulation, Single-Dealer Platforms | Tagged: Dodd Frank, MiFIDII, regulation, SDP, single-dealer platform | 1 Comment »

FXAll to register as SEF – my thoughts

Posted on May 6, 2011 by Paul Blank

Yesterday I blogged about how banks should be doing more to ‘future proof’ their single dealer platforms, by providing tools and services that would enable clients to continue dealing on SDPs with greater confidence, whilst complying with the evolving regulatory landscape.

I touched on the idea that bank SDPs should consider providing routing capabilities for client requests through to SEFs for products such as NDFs and FX Options if required: Continue reading →

Filed under: Dodd Frank, FX, Regulation, Single-Dealer Platforms | Tagged: Dodd Frank, FX, MDP, NDF, SDP, SEF, single-dealer platform | 3 Comments »

FX, better safe than SEF!

Posted on March 3, 2011 by Paul Blank

If confirmed, this will be a big win for FX Markets, and good news for FX Single Dealer Platforms, and will enable banks to continue to service clients with highly differentiated and innovative offerings.

It’s looking like FX markets have been successful in lobbying the US Treasury to exempt FX Swaps and Forwards from Dodd Frank legislation, according to a story carried in today’s FT (here).

FX Derivatives (Swaps, Options and perhaps long dated Fwds) fall under Dodd Frank Act (DFA), unless specifically exempted by the US Treasury (here)

Lobbying:

Exempt FX: Global FX trade bodies have argued that FX derivatives are very different from other OTC derivatives, and that counterparty risk which DFA seeks to eliminate is not a major issue in FX, and the more important settlement risk, is already fully managed by the CLS Bank settlement system. I have covered this in an earlier blog here.

Include FX: The CTFC (tasked with implementing DFA), has been seeking to have FX included under DFA. Also, a Washington based think tank was lobbying for FX to be included (here)

Filed under: Dodd Frank, FX, Regulation, Single-Dealer Platforms | Tagged: Dodd Frank, FX, regulation, SDP, SEF, single-dealer platform | 7 Comments »

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