Market sources say that there has been quite a drop-off in the liquidity seen on many platforms, reflecting both the market volatility and some of the concerns around credit. According to Mark Warms, general manager FXall Europe, the provision of work tools that take into account these changing conditions is an important part of the company’s attempts to cement its position with its buy-side clients.
The changing environment has led some business to move away from electronic mechanisms and back to the telephone. But Warms say that corporates still need to have a clear audit trail in place and they also wish to benefit from as high a level of straight-through-processing as possible. “We’ve made it easy for clients that even if they need to use the telephone to deal with their banks, they can still make use of our workflow features,” he says.
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“Having a clear audit trail of all transactions is becoming a real requirement and you can’t do that over the telephone” Mark Warms, FXall Europe |
“This is an ongoing trend but it’s become even more important. Control and compliance are incredibly important. Having a clear audit trail of all transactions is becoming a real requirement and you can’t do that over the telephone. People are concerned about being able to prove best execution. Control also extends to being sure trades have been allocated to the right accounts or that messages have been sent to prime brokers. There’s a lot more to dealing than just the price,” he adds. The issue of credit is clearly having an impact on the way business is being done. “A lot of corporates are looking to diversify their relationships,” says Warms. We’re seeing fresh demand. It is an issue to integrate to a platform; it takes time and effort. People want to ensure that the platform they connect to will still be around in six months. People are looking to partner with companies they feel comfortable will be around.”
However, he is swift to highlight that the importance of FX banks has not diminished. “The banks have become even more important as liquidity providers,” he says. “We shouldn’t play down the role they have to play in this market. But at times when credit is so precious, they are not so willing to put it out on anonymous platforms. If you take those away, you’re left with their own platforms and us. Increasingly, I think we’re seen as the banks’ preferred second choice. We are an important means for them to distribute their prices and attract good business. They know clients need the type of service we provide.”
