FX poll 1998: A tough race gets tougher
Banks everywhere are muscling in on foreign exchange - just as the costs of building a forex business are rising and spreads are tightening. Europe's commercial banks are trying to replace business lost with the onset of Emu. US investment banks are bolting forex on to their core activities. They can't all be winners. But, as Antony Currie reports, they can make life harder for those already at the top. Euromoney's 20th annual foreign-exchange poll follows. Research by Rebecca Dobson.
"At the start of last year there were still a lot of wannabes in this business," says David Barnett, vice-president, trading, Europe and Asia, for Royal Bank of Canada. "Now it's pretty clear to everyone that there are a maximum of 20 major players. And within that group, the big boys are pulling away and the rest are scrambling to keep up with them."
A combination of bank consolidation, corporate mergers, the Asian crisis and the growing role of technology is responsible for this. For the top tier they present a new series of opportunities (assuming they don't fall victim to a vicious merger or takeover); for the rest, it's crunch time.
The introduction of the electronic broking system and Reuters' foreign exchange trading system in the mid-1990s has made dealing prices more transparent and driven spreads down. Now the internet is the next means of communication being developed. Most of the major banks have internet sites providing research, and several smaller companies, such as Currency Management Corporation (CMC), offer spot and options trading over the internet (CMC reported turnover of $20 billion for 1997).