Three key platforms have an enduring appeal for dealers and clients in the multibank dealer-to-client space. FXall stands out as the biggest and most flexible. It does face some challenges in keeping up with the speed of trade requests that black-box clients are starting to demand, and it does not yet offer executable streaming rates, but its overall position is very solid. The platform is now breaking even and it is processing large and increasing volumes each month.
Banks frequently boast about their response times on the platform as a benchmark of the quality of their proprietary trading technology. Some banks have made it a target to always be one of the top three or five dealers. All of them refer to the platform as an important way to reach clients.
Now that side of the business is established, FXall is moving into post-trade services. These projects are at a fairly early stage, but they have started well. Settlement Center is offered either as part of the trading service or separately. It handles confirmations, matching, allocations, and reporting, Prime brokerage services are also in pilot. These services for banks use FXall’s network to give up trades. Enhanced market data will be available soon. But it is not standing still in terms of trading: a new batch trading product handles the fiddly book-keeping trades that asset managers need to complete. It is likely to push further into the real money and market-taking bank client bases in the coming months.
FX Connect is another excellent execution platform. The bulk of its buy-side clients are institutions, partly because of the strength of its netting and multi-account allocation functionality. It is especially good at integrating with clients’ order management systems and indeed with any interface that users need. Its new matching service, GTSS, is straightforward and effective. The whole platform is now so good at accommodating real-money-account clients’ needs that some banks have abandoned the idea of building their own institutional platforms, relying instead on FX Connect. As regulation places more pressure on institutions to seek competitive prices on forex transactions, more banks are likely to do the same.
Centradia is not very well known but it has an impressive strategy for dealing with its niche of clients. It caters for small and medium-size forex clients, and it has just four liquidity providers – Royal Bank of Scotland, Sanpaolo IMI, BSCH and SG.
The platform contains research from all four banks, alongside basic trading in forex and money markets, all of which is based on requests for quotes. The patent-pending trading model is very unusual. When an end user requests a price, the four banks send back their rates and Centradia picks out the best bid and offer price. Even if the user is the client of just one of the banks, he or she can still pick up prices from other firms. The banks then offset the risk with each other on an interbank basis when necessary.
That means clients always get the most competitive price available, and they get to maintain their relationship with their banks. In turn, the banks have no need to feed out prices that they are uncomfortable with, and are potentially able to reach a wider client base.
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