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risk management and account management tools and services.
He says: “Te distinguishing factor of BNP Paribas is that we try to create a very cost efficient process for the client to transact, using well co-ordinated technology and operational staff, a common set of standards across our products, and a platform that is robust enough to handle the full range of spot, forwards, NDFs, FX options and exotics.”
Going forward, Buthorn firmly believes that the demand for FXPB will continue to increase as a result of the incoming regulations, and much of the prime broker’s focus is on preparing for the regulations on both sides of the Atlantic and Asia. Since entering the business in 2010 BNP Paribas has seen significant interest coming from clients looking for a new service provider to the market. Furthermore, having a well-oiled platform from which to run the business has been a key advantage for the bank. “We have a very clear understanding around what we are trying to achieve and in providing the necessary technology. And we have ample capacity to grow the business,” he adds.
Dramatic change on the way
According to Jason Vitale, Global Head of FX Prime Brokerage and OTC Clearing, at Deutsche Bank the events of the past three years have meant that the prime brokerage industry will dramatically change. He says: “It’s a fun time to be in this market. In some ways, we are being asked to change our jet engine, mid-flight. Partly this is due to regulatory change, and partly because client business models have changed as a result of the credit crisis, which has forced them to focus on more liquid assets, such as FX and listed products. I think banks are realising that we need to be more efficient in how we service our clients and ultimately provide products which solve client needs
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now and intelligently look forward to their challenges down the road.”
As a result, a number of banks, such as Deutsche Bank, are starting to realign several business lines to bring all of the relevant prime brokerage businesses, which historically would have equity prime brokerage, FX, and now fixed income closer together and in line with how the world is starting to look.
Deutsche Bank’s clearing business brings together listed derivatives, FX prime brokerage and OTC clearing, interest rate prime brokerage and clearing, credit prime brokerage and clearing and equities prime brokerage and clearing. “We then complement our product tiers with cross asset services such as client services, centralized funding and product development. Te most important add-on to our clearing business construct is that we do not lose that important connection to the FX franchise,” says Vitale, who notes that the business model of FXPB is changing. In years past, FXPB was designed as a distribution tool to incentivise clients to trade with the franchise sales & trading desks of the FXPB bank. Te value added services of margin/capital consolidation, liquidity pool access and outsourced middle office functions were important to clients yet the clients primary priorities focused on franchise execution relationships.
Vitale now states that the model is evolving due to regulatory changes where the margin, capital and funding costs of continuing current business will put added strains on a clients portfolio. FXPB products and services will evolve to be the primary
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