A commitment to excellence - meeting regional demand for FX Prime Brokerage services
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clearing. Tis is poised to become a differentiating factor and one that will allow a prime broker to “future proof” its clients from changes in regulation and market structure.”
Technology and infrastructure
Paul Houston, head of FX Prime Services at Credit Suisse, says that a strong impetus is coming from regional banks and brokers responding to growing demand from their clients to trade FX. He says: “Tis is increasingly being facilitated through the ‘Prime of Prime’ model where the regional bank/ broker sets up an FXPB relationship with an established FXPB provider, thereby obtaining benefit of access to markets, pricing, liquidity and technology platform.”
“Te value proposition of FXPB has always been there, it is just that a few developments over the last few years have made it more pronounced for certain client types,” states Houston, “For instance, there is an increased pressure for clients, who would have previously concentrated their FX activity through a custodian, to show better FX execution. As we know, the FXPB model allows this and retains the efficiencies from an operational and collateral perspective of dealing through a single counterparty,” he adds.
Houston says the key to being a full service executing broker is the continual investment in technology and infrastructure to support the product. “Credit Suisse has just completed a full scale investment programme to enhance our FXPB platform: not only to improve our client facing technology and execution tools, but also to invest in the infrastructure required to ensure more than adequate capacity for deal processing and operational efficiency. Tis of course needs to be supported by a strong client service team who are able to act upon exceptions and focus upon adding value,” he adds.
Houston says Credit Suisse competes on a number of levels, as FXPB is part of Credit Suisse’s Global Prime Services platform. While Credit Suisse has a dedicated team supporting the business globally, it can leverage the infrastructure and resources of a large cross-asset prime services offering.
He says: “We can offer a fully integrated solution to clients if they require clearing services across asset classes and also provide access to other services: such as consulting and capital services.”
More specifically, Houston adds that technology is a key part of Credit Suisse’s offering and therefore an area the bank looks to add a competitive edge. Tis is not only through operational efficiency and client added-value tools post-trade, but also on the execution side. He says: “We offer our clients access to a full suite of execution solutions: Credit Suisse proprietary FX pricing and Algorithmic Execution Services as well as sponsorship and access to a number of third-party liquidity sources.”
Strong partnerships
For James Reilly, co-head of FX prime brokerage at Morgan Stanley, the success of a global FX prime brokerage offering rests in the ability to support demand for a broad range of products and services across a wide spectrum of market participants. He says that continued growth in emerging markets, increased liquidity in non-developed market currencies and proposed regulatory changes focusing on client clearing, have each contributed to an increased demand from regional participants and for regionally focused offerings.
Morgan Stanley has significantly invested in the FXPB business over the past two years and continues to develop and grow the franchise through recruitment, solution innovation by dedicated product development and technology teams, excellence in client service and through thought-leadership within the industry.
“As FX prime brokerage has matured as an offering, clients are able to access a broader range of operational services and a diverse array of client specific solutions. Credit exposure remains a core focus for many counterparties and FX prime brokerage mitigates much of the risk associated with bilateral trading, which will continue to be a trend across all client segments,” Reilly says.
Reilly says that a good partnership between the sales, trading, product development and technology teams has been key element to succeeding as a full FX servicing broker and in negotiating the expanding range of electronic FX products that Morgan Stanley now offers. He says: “As our business has grown, we’ve found it vital to maintain strong ties between those teams from a management level down. Tat close working relationship has allowed us to seamlessly deliver a broad product offering to our clients.”
april 2011 e-FOREX | 45
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