The back office, as Euromoney wrote in 2006, has not only become a business differentiator, but has also possibly become a barrier to entry (see Centrally cleared FX: More players for FXMarketSpace, Euromoney, November 2006).
According to consultancy company McLagan (Z/Yen), the internal costs of processing an FX trade, which include operations and IT charges, ranged between $1.50 and $9.25 for tier-1 and 2 banks at the end of 2006. Those figures, which exclude other charges such as brokerage and settlement fees, will have since come down because the cost of maintaining a back office is largely fixed.
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