Danske Bank to build new FX platform; seeks to expand beyond Nordic region
Danske Bank, Denmark’s largest bank, is developing a new FX e-trading platform it hopes will help expand its business in the market beyond the Nordic region.
The new system is set to come online late next year and will replace Danske Bank’s existing FX single-dealer platform (SDP), Danske Trader, which has been operating for six years, says the bank’s global co-head of e-trade, David Steiner.
In addition to FX, the multi-asset platform will be the e-trading venue for Danske Bank's equities, rates and fixed income products.
“The platform is going to allow our FX trading business to become selectively global. Our core market is in the Nordic region, and there we are going to grow and maintain our position and then we hope to become selectively global after that,” says Steiner.
This means that Danske Bank wants to recruit more hedge funds, private banks, regional banks in Scandinavia and around Europe as well as globally, and global banks into its FX client base, says Steiner.
Steiner says Danske is the largest bank in the Nordic region for fixed-income products tied to Scandinavian assets, giving its market offering an edge in FX regionally that it hopes to sharpen as it seeks to expand its business around Europe.
Steiner says Danske Bank is planning to use the new FX platform to focus on delivering “selective products distributed on a global basis” to a high end of the market with a view to developing long-term customer relations with new clients seeking access to financial products and services tied to Scandinavian fundamentals.
“We have some global clients already, but we think we can reach a wider group of them with this new FX platform,” Steiner says. “We have not really tapped these global markets for fixed income and rates yet because these are offerings we launched over the last two years.”
Steiner says that Danske Bank has “very big ambitions” in fixed income and sees demand for existing products in that market among private banks in Italy and Switzerland, for example.
Danske hopes to use its long-standing expertise in FX within Scandinavia to get a foot in the door for fixed-income and rates products at any bank in Europe that has clients demanding exposure to Nordic products.
“We know there is a bigger market out there for our fixed-income products, especially those that come from our specialist niche in the Nordic region,” says Steiner.
According to the Euromoney FX survey, Danske Bank is ranked seventh in FX in the Nordic region, with a 4.6% market share, trailing local rivals SEB and Nordea, which were placed fifth and sixth respectively in last year’s survey. SEB’s market share was double that of Danske.
In Western Europe overall, the bank overtook Nordea, as the second-biggest FX bank in the region, in 19th position.
In October, Nordea – the largest bank in the Nordic region – hired Henrik Holst from Saxo Bank to oversee the redevelopment of its FX trading platform.
‘Back to front’
Steiner joined Danske Bank in July, having been global head of e-FX at SEB from January 2002 until December 2011. He also had a brief stint at 360T before joining Danske.
The Copenhagen-based bank is taking a modular approach to the building of the platform from scratch.
“We are buying some portions of the new system and developing some portions ourselves with plans to add features to it over the coming years,” Steiner says. Features will include both pre-trade and post-trade transaction cost analysis functionality and algorithmic trading tools that will not be part of the initial release of the product but added over time.