As more and more foreign exchange business migrates to the electronic world, it’s no surprise that banks that have led the way in eFX – notably Deutsche Bank and Barclays have steadily built market share in the past few years.
Those banks looking to challenge the leading position of the top tier of FX banks know they need to recover ground fast. Citi, for example, has poured a lot of money and effort into building its Velocity platform. BNP Paribas is also making a big push with investment in people and technology in eFX (see Banks beef up in eFX, Euromoney, March 2010).
Matrix certainly looks the part and will have the geeks drooling over it. Matrix is a rich internet application – or software – that sits on the desktop but leverages web connectivity. Customers can also chat to other users, send videos, read tips from experts and update Twitter.
Adobe worked closely on Matrix, which was built using Flex, over two years. It’s the first of its kind to be launched using Flex technology, an open-source framework, on such a large scale.
Neill Penney, managing director and global head of FX product strategy at Morgan Stanley, says: “Matrix is a trading and research platform covering multiple asset classes, and the integration between these different components has been integral to the design from the very beginning.”
Matrix is offering FX, interest rate swaps, sovereign CDS and government bonds.
That in itself will probably not be enough to persuade clients to ditch their existing eFX platforms. As one senior FX banker says: “It’s not just a question of matching what we already provide; to persuade clients to change the platform they use, you have to offer something fundamentally different or better. And while people are trying to catch up with what we already have, we’re investing heavily to take our offering to the next level.”
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“We are currently rolling out Matrix, which we believe will help lift Morgan Stanley into a top-three ranking” Tod Miller, |
And if Morgan Stanley wants to compete seriously with other platforms, which are in their third and fourth generation, it needs to be as up-to-date as possible. Matrix is being rolled out to clients without currency options, precious metals and NDFs streaming. As one global head of FX says: “It’s absolutely necessary to have these features on new platforms launching this year otherwise it won’t be able to compete.” Morgan Stanley says it is “in the pipeline”.
Citi and Goldman are among the banks thought already to be in the process of adding this functionality to their sites.
Penney believes the big differentiator of Matrix comes in the slickness of the design: “We worked very closely with professional graphic designers, user experience experts, and application designers to create a product that looks polished and well thought out.
“Matrix is a pleasure to look at and we know this is something people respond to – feedback from clients has been very promising and Matrix is winning space on their crowded desktops. Those who have seen it recognize it’s very different to any of the trading platforms they already have.”
The bank is pinning its hopes on the platform, as well hiring across the board in sales and trading, in an effort to improve its market share in FX. Morgan Stanley slipped out of the top 10 in the FX poll last year to 11th place from eighth. The majority of its customer base had been in real money accounts and leveraged funds, whereas the top five players had much better penetration with non-financial corporations and banks.
Standard setting
However, the bank is confident that, with its e-commerce offering in place, it can become a serious player again. Tod Miller, global COO of the FX and emerging markets business, says: “Our e-commerce volumes increased more than four-fold over the last year, with a 100% increase in the last quarter alone. Driven by investments in pricing and risk management, we are now offering customers tighter prices and deeper liquidity than ever before. With the increased volumes facilitating trade internalization, our electronic trading book has now reached critical mass and we are projecting significant growth in 2010. We are currently rolling out Matrix, our new multi-asset trading and research platform, which we firmly believe will set the standard for the next generation of bank platforms and help lift Morgan Stanley into a top-three ranking in this business.”
