That the market is feeling the gravitational pull of a few big names has been one of our favourite topics for at least six years. But perhaps we are wrong. The very biggest banks have so far failed to become supernovas: the market share of the top five, according to Euromoney’s FX survey, was stable at just over 60% between 2007 and 2009 and dimmed to 54.6% in the 2010 survey. Perhaps last year’s result was a kink in the fabric of the FX space.
Yet I can’t help thinking that the laws of FX and physics are inescapable, especially after Mike Bagguley’s comment, quoted in last week’s theweeklyFiX, about the immense expense of preparation for, and speedy compliance with, new regulation. It seems that talk of FX provision having ‘barriers to entry’ at the highest level is not an accurate observation: the phrase ‘barriers to survival’ may be more appropriate for smaller bodies in FX’s expanding universe.
At a Citi presentation this week of its Velocity platform and the bank’s general approach to FX, I was impressed by how difficult it will be for most banks to accelerate with, let alone catch up to, the leading five or six.