LEADER
Strengthening client relations with FX e-services
Competitive marketplace
As many leading FX providers are now adopting more client-centric strategies when rolling out new electronic products and trading platforms, Nicholas Pratt explores in what ways electronic FX services can help improve and engender more productive client relationships.
T
he clearest trend in the last ten years within the FX market has been the embracing of electronic services. For the FX dealing banks,
adapting to the pervasive presence of e-commerce has not always been an easy task. Many of the early attempts by banks to create their own web-based trading portals proved unsuccessful, especially when competing against the multi-bank portals that emerged at the turn of the millennium, such as FXAll, Currenex and others.
Tere was also the feeling that electronic execution left banks vulnerable to being scalped by the opportunist high frequency traders that trawled the markets looking for pricing anomalies. More recently, however, the single bank platforms have undergone a resurgence. Tis could be a result of a general return to the traditional, transparent values of the relationship- based FX market of yesteryear and less preference for the less personalised environment of the multi-bank portals. Another explanation is more straight-forward – banks and other leading FX providers have got better at developing e-services and realised that good, quality electronic FX e-services can help to engender more productive client relationships.
22 | april 2012 e-FOREX
“Money managers, hedge funds and corporations enjoy a very competitive e-FX marketplace, in terms of both electronic solutions and liquidity,” says Tod Van Name, global head of FX at Bloomberg LP. “Te top providers offer markets in all instruments including spot, outrights, swaps, non-deliverable forwards (NDFs) and FX options. Te real opportunity, however, is to integrate seamless execution into pre-trade analytics and efficient workflow. We are constantly working with our clients throughout the world to incorporate local market conventions, tailored to user needs, into our products. Tose interactions, and the understanding it gives us of their business, establishes a firm foundation for a strong customer relationship but nothing makes it stronger than a great product that meets their needs.”
Te levels of e-service provision and e-trading platform functionality demanded by clients vary according to each customer sector (hedge funds, corporates, currency managers and so on) but the common factor is that all participants’ needs are continuing to grow, says Van Name. “Buy-side clients demand flexible trading access to deep liquidity and robust trading tools, including pre and post trade allocation, staging, netting, algorithmic trading, portfolio management, full audit trails and of course, straight through processing.”
Te enrichment of risk and research analytics as well order management capabilities are essential areas of development for FX providers. “As spreads compress, clients seek additional value from FX providers,
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