Usually when we receive letters we publish them in the Market Monitor section (see below). From next month, Euromoney is launching a dedicated letters page in the magazine and we would encourage readers who have a view, either on the contents of the magazine or website, or on key issues in the markets, to contact us. This is your opportunity to respond directly to what we write and we welcome your views and opinions - favourable or unfavourable. So if you have a few moments to spare, why not drop us a line?
You can contact the editor at Euromoney, Nestor House, Playhouse Yard, London EC4V 5EX or email to: letters@euromoneyplc.com.
Dear Sir
Euromoney, May issue: Online Foreign Exchange
Deep into your report of the events surrounding the closure of Atriax and how it would impact online foreign exchange trading, you touched upon an issue that I believe is central to the evolution of e-commerce in the capital markets: how to protect and foster customer relationships.
The multi-bank consortium models for forex and credit trading work best on the interbank level but evidently not so well when it comes to exposing customers to competitors. In the prevailing economic circumstances, banks have become highly protective of these relationships. Conceding a toehold in a largely commoditized service, such as forex, may put at risk highly leveraged business such as M&A.
Therefore, several of the major banks now familiar with the features of the Atriax platform are learning to harness the technology to serve directly their own customers and, ideally, establish a competitive advantage in developing new business.
In the Atriax and FXall models, the banks are required to extend credit directly to all buyside participants for whom they would provide liquidity. In a bank-to-regional bank-to-customer model (B-to-B-to-C) the flexibility of the technology lets tier-one banks build substantial, captive liquidity pools by enabling regional banks to "white label" sophisticated forex services to their customers at very little cost.
In essence, tier-one banks can focus on their core strength - depth of liquidity - while helping regional banks do what they do best - extend credit to smaller market participants.
In the sense that banks "learned by doing", the Atriax experience will, in fact, prove to be a much more valuable investment, for all parties, than you may think.
Harpal S Sandhu, CEO, Integral Development Corp, Mountain View, California