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amongst existing players due to the fact that there will
always be a demand for prime brokerage. The model
makes a lot of sense for the buy-side in terms of
consolidating financial positions and not having to
spread margins around different institutions. He says:
“Reporting has improved so that everything is on one
screen and positions can be
quantified more easily. A
major function of prime
brokers is the efficient
processing of trades and for
this reporting and reconciling, review their prime brokerage relationships, with an
consolidated accounts are crucial.” eye on the credit rating of a prime broker, the
functionality offered and they are also looking for aHotspot is adding order types and is in the process of
much better range of collateral arrangements that givemigrating clients over from the Hotspot GUI (Graphic
them greater comfort in the security of their cash.User Interface) to the Knight Direct platform, a
comprehensive execution management system, giving He says: “Clients are looking for greater security and
Hotspot’s clients access to multi-asset capabilities and there has also been a new wave of creativity around the
expanded functionality in addition to the current custody of assets and FDIC [Federal Deposit Insurance
Hotspot features they are already familiar with. Corporation] insured deposits.” In the past equities
were more asset-driven than FX, where the focus wasMavrinac thinks that the current core FX prime
on the clearing facilities offered by prime brokers, butbrokerage model will continue as it is but as the
post-crisis, Coyne says the focus is shifting.market matures, it will become more efficient in
terms of clearing and the ability to process increased The attributes of a strong prime broker have changed
ticket volume. little, says Coyne. “Clients will always look for a strong
FX player, with a global network, the sales coverage, e-Andrew Coyne, managing director, head of FX prime
commerce and electronic pricing capabilities. Postbrokerage and G10 e-commerce, at Citi says the
crisis has simply heightened the need for a sensitivityrecent financial turmoil has prompted clients to
to clients’ needs and the ability to offer different
collateral, or cash warehousing options.”
The broad client mix of Citi’s FX prime brokerage
offering means that the bank has developed a wide
range of solutions, for high-frequency and retail
segments looking for hand-free, low-cost throughput
with transparent transaction processing, to an offering
for the global macro customers, which want more
analytical tools and sophisticated reporting suites. Citi
has a real-time reconciliation and matching tool for
algorithmic traders and Citi’s FX Click interface for
prime brokerage, launched almost two years ago, has
been enhanced and developed ever since. “The
philosophy behind it is very much about flexibility. It
is very visual and allows clients to find what they are
looking for, in real time.”
Evolution
Andrew Coyne Coyne believes the FX prime brokerage will continue
“Post crisis has simply heightened the need for to evolve and develop, and remain highly competitive.
a sensitivity to clients’ needs and the ability to offer
He adds that the move by CLS and Traiana todifferent collateral, or cash warehousing options.”
aggregate trades will clearly impact the market in
|38 october 2009 e -FOREX
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