In the past the major banks shied away from getting directly involved with retail because of reputational risk. Now, with FX regarded as an asset class and the retail segment viewed as being a valuable source of flow, the aggregators too have to consider the damage that their WLPs can do to their own reputational risk.
Press coverage is often seen as an independent endorsement of a particular company’s services. The effects of winning prestigious awards, such as those in Euromoney’s annual FX poll, can be even greater. So it is no surprise to see both used by many firms as part of their advertising and marketing strategies. It’s all part of the game and this column has written several times about embellished or exaggerated marketing.
At Euromoney, we frequently receive emails asking about the veracity of some of the claims, particularly awards. You might think this is a simple, black and white issue: after all, a company either wins an award or it doesn’t. However, the market’s structure, particularly at the retail level, introduces a layer of opacity. To an extent, this is a legacy from the way the market has developed over the past decade. As retail platforms emerged, they sought to distribute their offering as far and as wide as possible. A major way to do so is by forming white-label partnerships (WLPs). For instance, Saxo Bank is believed now to have around 100 WLPs in place.
In the past the major banks shied away from getting directly involved with retail because of reputational risk.