Forex - MoneyShow.com

He says: “I think it has shown the world that the FX
business is still relationship driven. Despite the
increasing volumes of business being done
electronically, clients still want a sales person at the end
of the phone, therefore showing that voice single bank
and multi bank platforms compliment each other.” “In
times of extreme crisis people always pick up the
phone. The chat systems are also used extensively and
are integrated into some platforms to keep that oneon-one
relationship going.”
Best execution
The definition of best execution in foreign exchange
trading goes beyond the notion of best price. Many
buy-side firms define best execution in FX trading by
looking at the total cost to execute, allocate, and
settle an FX trade, including the potential for
operational risk inherent in moving cash
between accounts and counterparties.
Cohen believes the two models will
continue to exist side-by-side, simply
because of the compliance
requirement for certain fund
managers to get three quotes
for every deal. However,
banks are continuing to invest
in the single bank platforms and
Cohen says they continue to show growth.
“Relationship-based pricing enables banks to tailor
their services more specifically to individual client
needs and offer value-added post-trade services, such
as aggregation and straight-through-processing to the
client’s front office booking systems as well as back
office systems to enable automated allocations and
providing online reporting tools,” he says.
The recent crisis has put all the over-the-counter
market instruments firmly in the spotlight. Cohen
believes there has been greater focus on leverage in the
retail space. In the US and Japan the tighter leverage
regulations may have an impact on retail volumes
further down the line, but Cohen says the single bank
FX platforms are here to stay, due to the sheer
volumes being traded on them, the resources that
banks are putting into them and the fact that some
clients prefer to trade on them.
Going forward, Cohen says the banks will become
more innovative to keep clients on their single bank
platforms and this will take many different guises,
from adding liquidity, better pricing models, more
sophisticated execution models and algorithms, to
adding more products, such as more exotic options.
>>>
Andrew Cohen
“Relationship-based pricing enables banks to tailor their
services more specifically to individual client needs and offer
value-added post-trade services...”
Focus on relationships
For Takis Spiropoulos, managing director and head of
the e-Solutions group at CIBC World Markets, this
innovation will be very much web-based, and the
increased services that this enables banks to deliver
will be a key component in building single bank
portals in the future. Spiropoulos says there has been
a recent focus on client relationships across all asset
classes, and the banks with strong balance sheets and
high credit ratings were able to focus more on their
relationships and saw an increase in market share.
He says: “The events of the last year were a real
testament to the importance of the relationships with
clients. We saw a reduction in the number of bank
counterparties, defaults and credit constraints, and as
a result clients became more dependent upon fewer
banks for liquidity provision and funding. For a
number of primary dealers this presented
opportunities to strengthen relationships with existing
clients while opening the door to new clients in need
of products that were challenging to hedge.”
Spiropoulos believes that both FX ECNs and single
bank portals will continue to grow, but at different
rates, that are currency pair-dependant. The single
bank portals maximise the internalisation of what is
predominantly client flow for the more liquid G10
currency pairs, but the banks rely upon ECNs to
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