Author: Tessa Oakley
It’s finally official. Atriax, the long-awaited partnership between Citigroup, Chase Manhattan, Deutsche Bank and Reuters has launched. That the three banks would join forces has been an open secret since rival FXall was announced in May without these three banks, the top three in Euromoney’s annual foreign exchange survey. Each had been in the initial discussions for FXall in the six weeks before the launch, with Deutsche rumoured to be involved in even earlier exploratory talks which began about 18 months ago. Deutsche pulled out because it felt that it could not contribute the required resources and time to the FXall venture.
Unlike other multi-bank internet trading platforms, Atriax has not appointed a banker as the CEO. Instead the board has chosen someone from the buy side, Dan Morehead, formerly the chief Financial officer of Tiger Asset Management, who was First approached by Citigroup’s then forex chief, Guy Whittaker, in April. It’s a simple and effective way of reassuring potential clients that Atriax won’t become a cartel defending the interests and profits of the banks involved. And Morehead is backed up by an advisory board of 21 buy-side clients.
It’s a combination others have found hard to resist: 49 other banks – 35 from the Euromoney top 100, 14 outside it – have decided to join the platform, which makes Atriax almost twice as large in potential liquidity provision as any of its rivals. The 52 sell-side founder members share between them more than 50% of the daily $1.5 trillion forex market, though only about 5% of that market is traded electronically. Within two years, up to a third of forex trades are expected to go online. Morehead says: “Atriax will be the one place to go for liquidity.”
He adds: “The industry needed an e-commerce solution, and the cheapest thing was to do it together. We had the right core group to begin, with the three pre-eminent forex banks and Reuters, which knows everything about how to run one of these [platforms], and we’re taking the best banks in every currency. Members will be confident of having fantastic prices all of the time.”
Atriax is not an exclusive platform, and Morehead says that it is eager for FXallmember banks to participate. FXall is also non-exclusive, so there is scope for this to happen. Already there is speculation that JP Morgan will switch to Atriax after its merger with Chase Manhattan. But members of FXall are reluctant to comment on what Atriax means for them, mostly because they say it is too early to judge the market’s reaction.
Atriax went live at the end of October with news content from Reuters, and indexed research content which is available for two weeks to any investor that has a relationship with any of the participating banks. After that, Atriax’s policy is to let the banks choose who they make their content available to. “It will be interesting to see how the industry uses this,” says Morehead. “There is the opportunity for [banks to have] a wider audience and more trading relationships.”
