Forex - MoneyShow.com

RETAIL e-FX PROVIDER
Achieving more effective
Risk Management in Retail
FX platform operations
Faced with a need for more effective risk
management of their Retail FX customer
positions, banks and brokerage firms in the FX
space are being challenged by ballooning small
ticket items, varying customer credit limits, risk
mitigation issues as well strains on their back
office processing capabilities. Roger Aitken
talks to leading industry players to explore the
key issues involved.
ARetail FX customer base is very different
from the traditional corporate and
institutional client base of a bank or large
brokerage firm. For a start client numbers are
generally far greater and the pressures of servicing
these customers who produce a greater percentage of
small ticket FX trades, places an extraordinary load on
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the bank/broker systems, staff and processes.
Whilst the credit crunch has forced firms to improve
their risk management operations, the beauty of
margin trading is that there are no credit lines, with
clients posting collateral upfront with their broker or
bank, and trading a multiple based on that figure. This
multiple will depend on a number of factors,
including the quality of the client, what FX products
they wish to trade - from straight forward spot FX, FX
forwards through to vanilla and exotic FX options.
Automation is key
Clearly to remain competitive and avoid potential
blow-ups, firms need to step up to the plate and deploy
cutting-edge technology in their risk management and
FX margining systems. Having fast systems in place to
calculate real-time position and further calls on clients,
if positions deteriorate, is essential.