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minimise hedging and execution costs. The emerging
agency e-commerce approach also relies on accessing
ECN liquidity, using Direct Market Access, and
leveraging execution algorithms. He says:
“Additionally, banks are starting to trade with each
other directly, on an interest only basis. This way
banks can offload some of the risks between ecommerce
desks without leaving a large execution
footprint in the ECN market.” The higher the
consumption of liquidity, the higher the volatility so
as liquidity differs significantly between different time
zones and currency pairs it is natural for banks with
expert market knowledge in specific currency pairs, in
our case USD/CAD, to express this advantage in the
single bank platform through competitive pricing and
value-added offerings to attract client flow.”
Gateway to tailored solutions
Spiropoulos says that single bank platforms are ideally
suited to servicing the bank’s own retail discount
brokerage and wealth management businesses,
especially when the platform is enriched with suitable
content and integrated with efficient processing
management – key to successful custodian and
payment orientated solutions. “Multi-bank platform
represent the lowest common denominator, which for
highly commoditised products, such as FX, essentially
means price and straight through processing, whereas
single bank platforms can further enhance the client
relationship by targeting functionality to different
client segments, thus providing banks with the
opportunity to differentiate their service to the client.”
In the corporate sector, working closely with the
treasury department to help them streamline their
operations and exposure management, and satisfy
their ever-increasing accounting requirements, can be
catered for by the single bank platform.
Single bank platforms leverage the aggregated
liquidity and proprietary market making algorithms
to produce competitive and consistent pricing.
“The initial perception was that e-commerce platforms
were about price and execution. It is now understood
that single bank platforms also add value to the client
by providing pre-trade and post-trade functionality.
We see the single bank portal as an investment in
client relationships. It is a gateway to tailored solutions
to meet client needs,” Spiropoulos says.
Going forward, Spiropoulos believes that as
technology and web browsers evolve, web based
solutions are becoming viable alternative to installed
applications and are more suitable for cross-asset single
bank portal development. For example, auto-hedging
30 | january 2010 e-FOREX
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the FX risk inherent in cross-border trading of equity
and fixed income instruments will be much easier. He
says: “Leading single bank platforms will increasingly
become client-focused, rather than product-focused,
and leveraging emerging web-based technologies to
enhance the user experience and bring the user closer
to the trading venue. For example, client designed
pages on a single bank platform, advanced searching
capability and stored searches, decision support using
analytics and calculators with linked charting
capability, integrated news, research and chat facilities.
All these features are much easier to integrate on webbased
technology rather than installed application.”
Growth patterns
Every year, since 1993, consultancy ClientKnowledge
interviews 2000 wholesale customer counterparties in
the foreign exchange market to survey the different
channels FX business is being traded, and the research
reports a slight shift towards the multi-bank platforms.
Justyn Trenner, Principal of ClientKnowledge, says
that all currencies, including the most liquid, were
impacted by the financial crisis across all platforms
and electronic venues. As a result business,
particularly large orders, shifted back to the phone
and although there is flow is starting to go back to the
electronic trading systems, this is not the case for
much of the large order business. He says: “There is
also an interesting nuance that banks are sometimes
restricting their trading with other banks as
counterparties in order to ensure that they can
Takis Spiropoulos
“We see the single bank portal as an investment in
client relationships. It is a gateway to tailored
solutions to meet client needs,”