Choice and Flexibility – reaping the benefits of more integrated FX e-Commerce services
According to Fokianos, successful execution venue is not limited to just transaction functionality. Market information, research, views, and quantitative techniques provide a crucial insight to clients who wish to transact balancing different elements. FX is almost always affected by a number of different factors. Testing scenarios through Quant tools using historical data is an important investment tool. In an e-FX market where pricing is mostly commoditised and execution features are standardised, what stands out as a differentiating factor is such value-added services.
“RBC Capital Markets is continuously working hard to provide its customers such added-value tools; combined with our trading ability and our consistently good fills, we are the reliable partner FX bank,” he adds.
e-FX as a strategic asset Stamos Fokianos
“Highly transactional clients, and of course FX banks, are now using their operations teams to investigate
‘exceptions’, rather than manually going through every trade done on a particular day,”
even run risk if they are mandated. Says Fokianos: “It’s a question of seeking efficiencies in combining asset execution or keeping separate and netting, and the answer to that depends on the way every client operates. RBC Capital Markets is supporting all models. Our proprietary platform contains fixed income as well as FX for combined execution, but we can also deal independently on asset classes through a number of electronic markets.”
He adds that RBC aims to attract clients on a relationship basis, as a strong financial institution that has proved that taking trading risk does not mean taking operational risk. “Our clients deal with us because they know we are always there for them providing competitive and consistent pricing, servicing their needs. We are supporting different client segments and execution styles because we are a sizeable market maker and can operate efficiently in different types of markets and volatility levels,” he says.
For Fokianos, the ‘workflow’ of an FX deal/order facilitated the advent of e-FX, which then facilitated the change of the FX workflow. “It is a circular relationship that is fused by new technology and continues to feed back change. Tere is no putting your head in the sand; e-FX is not a choice, it is inevitability. No matter what the client’s core product is when the temporary monopolies, created originally by innovation and exclusivity, disappear, the only way to continue being profitable is managing costs as profit margins get reduced.”
To achieve this, Fokianos believes economies of sale are needed to reduce unit costs and at the same time automate the peripheral activities that contribute to the bottom-line. “Whether you are a car manufacturer in the UK selling to the Euro zone, or a fund manager running emerging markets funds out of Europe, you need your “peripheral activity” of foreign exchange risk managed quickly and efficiently. You need e-FX. It is a strategic asset that sits in your critical path from production to receiving revenue from sales.”
With this in mind, Fokianos says client feedback is always around competitive pricing, STP and automating their processes. For them, there is an “all-in” execution cost that encompasses a number of different components, including the need for certainty and confidence in their financial counterparties, not just the narrowest spread. And for this reason, now that much work has been done by the e-FX providers on fully integrating their clients’ workflows, they are now reaping the benefits.
april 2011 e-FOREX | 69
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