The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Trade processing: A utility from Wall Street

A good deal has already been written about the relatively high cost, at least when compared with many other markets, of processing trades in foreign exchange.

The back office, as Euromoney wrote in 2006, has not only become a business differentiator, but has also possibly become a barrier to entry (see Centrally cleared FX: More players for FXMarketSpace,  Euromoney, November 2006).

According to consultancy company McLagan (Z/Yen), the internal costs of processing an FX trade, which include operations and IT charges, ranged between $1.50 and $9.25 for tier-1 and 2 banks at the end of 2006. Those figures, which exclude other charges such as brokerage and settlement fees, will have since come down because the cost of maintaining a back office is largely fixed. This means that a greater number of tickets pushed through must result in a lower per ticket cost. But, with such wafer-thin margins, there is a danger that many smaller banks are being priced out of the market by their post-trade expenses.

Given the present wave of consolidation in the industry, this should cause concern, even to the large players that have been able to use their volumes, and subsequent lower processing costs, to gain a competitive advantage. The liquidity that has been added to the market by the banks that are now disappearing has to be replaced.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree