A bank does not grab the largest market share in forex by luck. So when the 2003 Euromoney forex poll showed UBS to be the biggest dealer, it was a reflection of its top-notch services and strategy.
UBS emerged as only the second bank ever in the poll’s 25-year history to knock Citigroup off the top of the market share rankings.
Some of the reasons for this success are well known. UBS makes good use of technology, internally for trade processing and externally for deal execution by clients. It has also done a superb job attracting volumes from smaller banks – nearly 20% of the total turnover according to Euromoney figures.
But in a sense, that is just the start. As any other big forex bank will testify, strategy and technology are nothing without good liquidity and good service for all client groups. UBS’s forex business is not, as some rivals might argue, a glorified electronic trading system.
“A lot of people believe we have built a separate eFX business, but we haven’t,” says Fabian Shey, who is jointly responsible for UBS’s global forex services alongside Martin Wiedmann. “We have woven electronic distribution into the fabric of our business, and totally re-engineered the way we cover clients.” This is a subtle but important difference, and it means that UBS has been able to increase volumes and client reach without adding significantly to staff numbers.
The liquidity outsourcing project known as “Bank for banks” at UBS has without doubt helped to make it the dominant firm in attracting volumes from non-market-making banks, and it is the envy of several rival firms. But it is not the bank’s only strength. “In London alone, we have added 16 new leveraged fund accounts over the past couple of months,” says Shey. “And that is just in London – we cover these clients all over the world.” Similarly, the bank continues to attract new prime-brokerage clients, including blue-chip names, some of which were previously clients of other firms. “Our formula works well right now, particularly for this segment,” says Shey.
The bank is now in a position where it has developed high-quality services across the board, from research, through advisory, to post-trade. And as it runs all of those under one organizational structure, it can simply pick and choose pieces of that to tailor packages for different types of clients. Shey is confident that the bank can continue to build volumes and market share. “We have capacity to handle more clients and more volume,” he says. “Our business model is well positioned for further growth.”
