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Capital Markets

Electronic Trading: Who can challenge the dominant duo?

Other banks' proprietary platforms need to pick up market share fast

Van den Heule: Barclays Capital
hopes technology developed in
house will win new business

If the future of foreign exchange trading is electronic, then things look rosy for Deutsche Bank and UBS. But other large banks are redoubling their efforts to compete with the big two. According to Euromoney's latest foreign exchange survey [see Euromoney May 2005, FX Poll], these two banks account for more than 60% of electronic trading through their single-bank proprietary platforms.

It is no coincidence that Deutsche and UBS also ranked first and second respectively for overall market share, and their dominance in the single-bank space remains an ominous challenge for any other FX player wishing to close the gap.

Total e-FX volumes doubled last year to $15.7 trillion, compared with $7.2 trillion in 2003. As more FX users trade online and increase the proportion of total trading volume that they execute electronically, banks have had to get smart to win their business.

"It's not too late to try to catch up," says Vince O'Sullivan, director at Barclays Capital in London. "We've definitely increased our e-volumes but we still see considerable opportunity for growth."

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