Retail FX: Banks work out you’ve got to be in it to win it
Once the ugly duckling of the FX market, the retail segment is now seen as offering rich pickings from those who position themselves correctly.
ABN Amro and Deutsche Bank look to have set a precedent with their moves into the retail foreign exchange market in 2006. Both did so in partnership with established retail FX platform providers. Market sources are now predicting that at least three top 20 FX banks will sign partnerships in the first half of 2007 to join them, with others following shortly after.
Gain Capital, CMC Markets, Saxo Bank and Oanda, which has already partnered with ABN Amro, all confirmed to Euromoney that they have had discussions with banks over the past few months: "Until last year none of the banks had dipped its toe in this market. Now that a few have taken the plunge, we are having many more discussions with large sell-side banks," says Mark Galant, chief executive of Gain. In a similar vein, Peter Cruddas, chairman and chief executive of CMC, admits talks have been held but says: "We have not signed with anybody yet."
ClientKnowledge, a research and advisory firm, states in a soon to be published report called Retail FX: Understand the trend, leveraging the opportunity: "There is a fundamental business rationale driving interest in this sector." The company says it is not uncommon for the large retail platforms, such as Saxobank, to attract daily turnover of about $15 billion and it believes there are already up to 100 platforms.