Jyske is the first bank to be signed up by Progress and Caplin since they announced a tie-up to provide end-to-end solutions for the increasing number of regional banks embarking on new SDP projects. “We made the decision because FX trading has always been important to Jyske Markets, and if we wanted to stay in this business, we needed to develop a new electronic price engine and also a new front-end system,” Lene Papsø, head of FX, interest rates and commodities at Jyske Bank, tells EuromoneyFXNews. “It is what we need to be an investment bank.”
The partnership between the two technology vendors allows the delivery of the back-end Progress Apama Capital Markets Platform, which provides pricing and processing, together with Caplin’s front-end graphical user interface.
Papsø, who describes Jyske’s existing white-label electronic FX platform as “one-size fits all”, says one of the attractions of working with Progress and Caplin was the ability to customize its new system to its own needs and those of its customers.
“We can’t have institutional clients, or for that matter private-banking retail clients, if we can’t offer this,” she says. “This will be a necessary step forward.”
The new SDP, which Jyske expects to go live in the second half of 2013, will support 200 of the bank’s institutional clients across Scandinavia. It will then be rolled out to retail customers.
Jyske ranked fifth in Norway in this year’s Euromoney FX Survey with a market share of 7.54%, and was placed 15th across Scandinavia. Globally, Jyske is the 59th largest FX bank, according to the survey.
Jyske expects the platform to attract new business, helping it build on its niche in Scandinavian currencies, which is where it believes its pricing strengths lie.
Papsø says the bank does not have the resources to build an SDP in-house, but that it was important to have a system in which it had been involved in the development process.
Jyske expects more than 90% of its FX business to be transacted over the platform.
Paul Caplin, CEO at Caplin Systems, says almost all large banks now see the need for an SDP, particularly in FX trading.
“It is now an indispensable channel to market,” he says.
Caplin says, until now, banks that did not want to develop their SDP systems in-house either had to buy monolithic and inflexible end-to-end solutions that they had no opportunity to customize or enhance, or they had to build a platform out of many difficult-to-integrate pieces.
“What is exciting about this project is that it is an integrated end-to-end solution that is open, highly flexible and highly customizable,” he says.
Richard Bentley, at Progress Software, says more regional banks, such as Jyske, are looking to provide a complete shopfront to their customers, providing for all their trading needs, including a mobile platform.
He says just four or five years ago, when his firm started operating in FX, they were working with the large flow monsters of currency market, such as Citi, HSBC and Credit Suisse.
Now, Bentley says the majority of the firm’s work is with regional banks.
The big banks used to be the only banks that could provide a one-stop shop; the only ones that could provide access to more exotic products such as derivatives. That is no longer the case.
“What you are seeing is the maturation of a technology,” says Bentley. “Something that only the big banks used to be able to do is now, through technical innovation and more advanced capabilities, available to the smaller banks.”
He says the move towards SDPs is part of the process by which regional banks are looking to provide their customers with more advanced trading capabilities, better prices and broader services, and therefore lock in more of their business.
“The regional banks that have that solid client base, and perhaps weren’t as exposed to some of the problems over the last few years, are seeing they have an opportunity,” says Bentley. “Their clients, by and large, would rather deal locally than have to deal with a larger bank in Frankfurt or London.”
|Lene Papsø, |
“We can’t have
or for that matter
retail clients, if
we can’t offer this.”