FX volatility takes shine off multi-dealer platforms
Big foreign-exchange banks are focussing on enhanced functionality to promote greater use of single-dealer platforms.
The return of volatility in FX last year created the necessary environment for relationship-based trading between banks and their clients. When volatility hits, market participants tend to want to execute with certainty.
Citi’s decision last month to consolidate its e-FX trading platforms into a new single-dealer platform was a reminder of the extent to which banks are pushing their own trading infrastructure as a better option than multi-dealer platforms.
Other banks have extended the functionality of their platforms, with UBS pushing the boundaries on the amount of liquidity provided to clients electronically by offering up to €500 million notional on its single-dealer platform.
“The direct nature of trading through single-dealer platforms can provide stability and reassurance to clients when markets are moving, especially as bank platforms have become increasingly sophisticated, with ultra-low latency and high throughput,” explains Vikas Srivastava, chief revenue officer at Integral.