Smaller banks rush to develop FX SDPs; Caplin and Progress Apama team up

By:
Peter Garnham
Published on:

Caplin Systems, the technology vendor that specializes in building FX single-dealer platforms (SDP), has announced a partnership with Progress Software Corporation to deliver its trading technology and provide a complete solution for the increasing number of regional banks embarking on new SDP projects.

The tie-up enables the delivery of the back-end Progress Apama Capital Markets Platform, which provides pricing and processing, together with Caplin’s front-end graphical user interface (GUI).

The combined product provides an end-to-end e-commerce platform, accessible from a variety of mobile platforms. It has already been selected by a northern European bank for its institutional and retail FX spot and derivatives business.

The partnership comes as both firms attract increasing demand for their services as regional banks launch new SDP initiatives.

Increasingly, those tier-two and tier-three FX banks are opting for a hybrid model of buying platforms and frameworks that deliver much of the functionality as standard, but can be customized to deliver additional features as needed by emerging business and regulatory requirements.

Unlike top-tier FX banks, regional banks do not typically have the in-house development skills, resources, budgets or desire to build a complete SDP from scratch.

"Partnering with Caplin is a natural choice for us, as we both attract customers with similar profiles – banks that require robust, proven technology but need the freedom to tailor their solution and differentiate their offering, as well as confidence that the technology will scale as their business grows," says Richard Bentley at Progress Software.

Paul Caplin, CEO at Caplin Systems, tells EuromoneyFXNews that there has been a huge shift towards banks aggregating, managing and distributing their own FX liquidity over the past few years.

"It is very clear that you can make more money by aggregating liquidity from multiple sources and managing it skilfully," he says. "You can generate more flow that way and make better margins. It is just until recently it was too technically complex and expensive for smaller banks to do."

Early products that aimed to solve the problem were monolithic business applications that were difficult to manage, extend and customize.

But now, Caplin says there is a new generation of platform-based products that are much more open, customizable and extendable.

"The giant tier one banks have been doing this for quite a long time, it has now become possible for the smaller banks to do it in a quick and affordable way," he says.

"The link-up between Caplin and Apama was a very natural one because I think they have one of the best back-end platforms and we have a unique front-end platform."

Caplin says the partnership also makes sense since the two firms tend to be in development discussions with many of the same banks anyway.

"We have a great prospect list at the moment, and we are at an advanced stage with several of them already," he says.