Five-Star Foreign Exchange 2017: What clients want in FX
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Five-Star Foreign Exchange 2017: What clients want in FX

The foreign exchange market has long been dominated by a select group of large banks, but Euromoney’s inaugural five-star FX rankings show a different set of banks may be providing the best client service.



Euromoney's five-star FX providers 2017


State Street

Standard Chartered


Standard Chartered


E.Sun Bank

Standard Chartered

State Street


Westpac Banking Corporation

Central & Eastern Europe:

Société Générale

Latin America:


Middle East:

Standard Chartered 



A five-star ranking can be the making of the modern hotel or restaurant, recognizing excellence in accommodation and dining while also rewarding top-notch customer service. But five-star venues are often not those with the highest turnover or throughput of customers; a boutique country hotel, for example, may offer a far superior experience to the local chain hotel, but its capacity will usually be much smaller.

In foreign exchange trading, it now appears a similar chasm may have opened up between the top-tier global banks that have long dominated the industry in volume terms and the more niche providers that deliver superior service in particular currencies and for different client types. Euromoney’s inaugural Five-Star FX rankings identify for the first time those banks that are recognized by their clients to deliver a best-in-class service.

“We have a very select client base in the institutional money manager space,” says Michele Hardeman, global head of FX sales at State Street Global Markets. “Having that specialized client base means we don’t always top the overall market share rankings, but it has been a differentiator because it allows us to address the unique needs of investment managers.” 

The Five-Star FX rankings recognize providers that scored high ratings across five qualitative areas of client service: salesforce coverage; breadth of product coverage and capacity to deal in size; execution quality; research; and risk management solutions. 

State Street and Standard Chartered were the only two institutions to earn a star in each of those five areas, making them five-star global FX providers.

Standard Chartered was also one of the best performers in this year’s Euromoney FX survey, rising from 15th place in 2016 to ninth in 2017, with its market share shooting up from 1.82% to 4.26%. The star ranking further underlines that the growth strategy in foreign exchange the bank set itself several years ago is beginning to pay off. 

“We recognized that with a vast geographical footprint and phenomenal amounts of FX expertise within the bank, we needed to make sure we have the best people in every country and that we syndicate and distribute relevant information to all of our clients,” says Mark Webster, global head of FX sales at Standard Chartered.

“We sought to build a single FX team across sales, trading, research, regulatory resources, back office and IT so that we could all leverage each other’s resources and deliver them to as many clients as possible in as efficient a manner as possible. That’s a challenge for an institution that is active in 72 different countries, but the strategy is paying off.” 

The strategy involved identifying internal champions for all of the geographies and products that may interest clients, so that credible information can be fed quickly to where it is needed most. Salespeople can then identify the relevant champion for their clients’ needs, ensuring that the necessary services are efficiently deployed.

“If a client can get immediate access to the information they need about what is happening on the ground in Nigeria, for example, or the impact of regulatory changes in Malaysia, it is a very powerful offering,” Webster explains. “The champions approach means that while everyone in the bank has their own role, some also become the ‘go-to’ person for information on a particular currency or region.”

The importance of local knowledge and expertise is not unique to Standard Chartered. It is probably the most recurrent theme across these rankings. Every institution recognizes that while it might aspire to global coverage and dominant market share, deep knowledge of political and economic developments in individual countries cannot be skimped upon.


Marc Zaffran,
Société Générale

Société Générale earned two stars globally – for research and solutions – but its strength in central and eastern Europe was recognized with a five-star ranking there. Marc Zaffran, the bank’s global head of FX and emerging market sales, believes a strong local presence across the region dating back many years has allowed it to deliver excellence in sales, trading, research and technology.

“In CEE and emerging markets, clients really value banks that show commitment to their region in the long term, rather than entering the market for a few years and then pulling out,” says Zaffran. “Clients want to be able to rely on counterparties that will be consistent in terms of their presence and their pricing – they accept that spreads will vary as a result of market conditions and liquidity, but consistency is critical.”

The value of consistent pricing is a point echoed by Webster. 

“It is not realistic to offer the best price all the time because there is a cost to producing those prices, and regional nuances that must be taken into consideration,” he says. “We have sought to be consistently credible on price and to focus on the intelligence we are delivering in particular markets.” 


Consistent pricing may be a differentiator for clients, but it is not the whole story. In an age of 24-hour news coverage, social media and information overload, the role of research is often overlooked, but it is arguably now more important than ever. In accessing complex or risky emerging markets, participants rely on their counterparties to deliver informed and prescient research to support their decision-making.


Global banks often run central strategy desks that churn out research for particular regions, but it is those firms that are able to combine that content with on-the-ground expertise that differentiate themselves the most. 

When a far-flung central bank suddenly raises interest rates or removes a currency floor, for example, portfolio managers need real-time commentary from economists in that market to predict what the impact may be and thereby inform their next steps.

A decision by the Argentinian government in December 2015 to lift currency controls was a case in point. By allowing the Argentine peso to float freely, then newly elected president Mauricio Macri sought to bolster economic growth, but the move sparked a sudden and sharp devaluation of the peso, which left participants in immediate need of informed market commentary. 

“Having local economists and sales and trading teams on the ground taking the pulse of every market and evaluating each country’s politics on a daily basis really makes a big difference to the quality of our research,” says Carlos Xirau, head of Latin America corporate and public-sector sales and structuring at Citi. “This proved to be particularly valuable in Argentina, when Citi was one of the first banks to organize a global call to explain to clients what the currency changes would mean.”

Citi, which retained an overall lead in this year’s Euromoney survey, was one of the few top-tier banks to also penetrate the five-star rankings, scoring a star globally for its provision of risk management solutions and a five-star regional ranking for Latin America. 

Xirau believes Citi’s global franchise has given the bank an edge over its smaller competitors in the region.

“As a large global bank, we are able to offer a local service with a global platform,” he explains. “We are active in 21 countries in Latin America, which means we have sales and trading locally and can combine that with deep expertise of how these markets work and strong research content.”

The value of local expertise was highlighted again more recently in April when the Czech National Bank suddenly removed the Czech koruna peg, which sent the currency’s value soaring against the euro. Although it was not as globally destabilizing, the move awakened memories of the removal of the Swiss franc floor in 2015, which caused gyrations in the FX market and widespread losses. The Czech floor removal created an opportunity for banks such as Société Générale to leverage their local presence in the Czech Republic.

“We have found that a lot of clients want to receive both our international and local research; and this became particularly apparent when the Czech floor was removed,” says Zaffran. “We had clients calling from all over the world to ask what our Prague-based economists and strategists thought would be the implications. We can’t provide this kind of local insight in every country in the world, but we can do it right across CEE, where we are known to have invested heavily.” 

With the recast Markets in Financial Instruments Directive (Mifid II) set to be implemented in Europe next year, research must now be unbundled from execution and delivered as a paid service in its own right. This will further underscore the importance of strong and credible analysis, as clients will only pay for content that will add value to their business.

“Mifid II will require firms to identify the research providers that deliver added value because they will have to pay for it,” Zaffran explains, “and we will continue to be strategically targeted in our research. We wouldn’t ever deliver average content where we don’t have more local knowledge than other banks, but we can clearly differentiate ourselves in Moscow, Warsaw and Prague.”

Local expertise is not just about delivering timely and relevant research, however. Banks also need a strong grasp of the unique regulatory and political environment in every country in which they are active. While there is no shortage of material available on regulatory changes in western jurisdictions, it becomes more complicated in emerging markets, where information is less readily available and clients often rely on their counterparties to tell them how business should be transacted locally.

“We have seen some very aggressive and severe regulatory changes in recent years,” says Webster, “and they introduce new ways of doing business in a slightly different format. Clients need confidence that the institution they’re dealing with can deliver accurate and relevant information and advice.” 

Quality of experience

The success of banks like Société Générale in CEE and Standard Chartered in Asia suggests that those institutions that have built core strengths and secure client bases in a particular region, currency or product set may be better placed to win favourable ratings from their clients than the top-tier global banks that seek to build or maintain a global FX franchise. 


Like the boutique hotel, Société Générale and others have differentiated themselves on the quality of experience rather than the overall number of clients

But Citi’s success in Latin America suggests it is possible to do both, while Bank of America Merrill Lynch, which climbed from fifth to fourth place in this year’s market share survey, also scored a star globally for its risk management solutions and achieved a four-star ranking in North America. 

Internal organization of teams is likely to be critical for those top-tier banks that want to provide the best possible service on a local basis. Standard Chartered’s strategy of identifying internal champions has clearly served the bank well, while BAML has sought to ensure its sales teams do not get too narrowly focused on their own particular niche.

“From a service perspective, our sales teams understand what is going on in the rest of the world and in other sectors of the FX market,” says Bryant Park, head of global FX sales at BAML. “This is a flow-driven market, so our hedge fund specialists need to understand what is going on with corporates, for example, and vice versa.”

Technology and execution expertise is also likely to be a differentiator for global banks because, while a regional player might have superior on-the-ground knowledge and experience, it is unlikely to have the same kind of technology budget or trading capabilities as a top-tier competitor.

“Our local clients in this region benefit from the investment we have made in our global trading platforms such as Pulse and Velocity,” says Citi’s Xirau, “so we can provide differentiated electronic execution and pre- and post-trade services on an integrated basis across most of the region, which many of our competitors cannot.

“There is a significant advantage for a corporate client in being able to access the same platform and service level across multiple countries in a particular region,” he adds, “whereas many smaller banks may have strengths in select countries rather than the whole region.”

Bryant Park, BAML

Park suggests BAML gains similar advantages from its technology, and a global FX franchise also has the advantage of being able to internalize transactions where possible, he says, rather than trading them on the public market, thereby reducing market impact.

“Clients now pay a lot more attention to market impact,” Park explains. “Given the breadth of our franchise and the natural offsetting flow from a diverse client base, we can internalize a lot of our flow and thereby provide better liquidity. What clients want most is quick, fair and unbiased pricing with reliable liquidity. Whether trades are executed over an electronic channel or voice, we deliver what is best for the client.” 

But these rankings show that important as technology and market impact may be, they do not preclude smaller, more niche providers from excelling locally. In Asia for example, five stars were not only awarded to Standard Chartered and State Street, but also to E.Sun Bank, a Taipei-based institution that has achieved a strong FX footprint across Taiwan and through its presence in locations including Hong Kong, Singapore, Sydney and Los Angeles. 

“We believe E.Sun outperforms its competitors in three main areas,” says Peter Shih, head of trading at E.Sun Bank. “We have a comprehensive trading platform and customers can access the service via both physical and virtual channels; we offer a superior service in terms of trading hours; and we seek to innovate in our product offering, including our use of online channels and social media. 

“As one of the largest FX providers in Taiwan, we do have a scale advantage, so we can offer very competitive pricing for corporates and individuals. Furthermore, E.Sun teams up with sales and traders to quickly provide clients with market updates and quickly fulfil their needs, which is important for corporate clients. We have six overseas branches and two subsidiaries, which means clients can access our pricing across the region and globally.”

Ultimate question

For all of the banks that feature in the star rankings, the ultimate question they have had to ask themselves and their clients is: what constitutes a value-added service in foreign exchange today? The answer inevitably varies depending on the region and institution concerned, but it is perhaps those banks that have failed to ask that question and act upon the answers that do not feature in the rankings.

State Street’s Hardeman believes that for the firm’s institutional clients there are three primary considerations that must be addressed – alpha generation, risk mitigation and access to liquidity. State Street Global Markets has an exclusive partnership with PriceStats, an academic initiative spun out of MIT that provides high-frequency global inflation indices and insight into key macroeconomic variables. She believes this has been a differentiator for its support of alpha generation. 


“In some countries, inflation indices only come out every quarter from official institutions, so there is value to fund managers in having a more frequent view of inflation,” says Hardeman. “We try to think about our customers in a holistic way, so rather than asking solely what they need from an FX perspective, we look to understand how they are operating more broadly and how we can help them generate alpha.”

State Street also works with clients to identify and manage risk in multiple ways. It has developed measures of market turbulence and systemic risk that it has found can be very beneficial in managing portfolios during times of high risk. 

Systemic risk is measured through an ‘absorption ratio’, which captures the fragility of equity markets, so that clients can be made aware of when unexpected shocks may be more likely to occur. Meanwhile, ‘turbulence indices’ provide a daily measure of market turbulence based on the collective unusualness of a given set of investment returns.

“Turbulence looks at the normal path of correlation over time and identifies when correlations start to break down,” Hardeman explains. “This can be an indicator to clients that they should consider scaling back risk positions. This is an example of where we have worked with academics to produce bespoke analysis that focuses on what our clients need.”

Mark Webster 2016-160x186
Mark Webster,
Standard Chartered

Critical as alpha generation and risk management may be, they must be combined with strong and credible pricing and execution capabilities. State Street provides 24-hour client coverage to ensure constant access to liquidity and it has focused on emerging market pricing. With three core pricing centres in London, Boston and Hong Kong, it also prices locally from its Korean and Taiwanese branches, which Hardeman believes has contributed to its five-star rating in Asia.

“Our pricing in EM currencies is very strong and we have seen increasing interest in this area over the past six months,” she says. “We have invested heavily in our electronic pricing and algo capabilities in direct response to customer requirements, and our Korea and Taiwan operations have achieved increased market penetration.”

In drawing conclusions from the star rankings, the core message seems to be that anything is possible. The diversity of banks that scored highly in particular regions shows that both regional and global institutions can earn recognition if they properly apply themselves to the needs of their clients and make sure they have a strong and informed local presence. 

Banks that do not feature should perhaps address themselves more directly to their clients, asking them to rate their performance and tell them where they are losing out to competitors. The FX industry is unlikely to stand still over the next 12 months; further innovations and market developments will undoubtedly result in shifting client expectations. 

“I still worry that too many things are done the way they always have been,” Webster concludes. “There has been a lot of electronification of processes, but the actual processes themselves often haven’t advanced so much. As banks, we cannot be afraid of innovation and we have to be constantly creative or we will risk being disintermediated.”



Euromoney’s inaugural five-star foreign exchange survey recognizes liquidity providers with exceptional qualitative ratings in particular regions and areas of client service.

To produce the results, Euromoney examines the FX survey’s 10 quality of service questions and splits them into five buckets:

Breadth & capacity – Breadth of product coverage and ability to deal in size

Execution – Trader quality

Salesforce coverage – Excellence of salesforce in Asia, the Americas and Europe

Research – Including flow research, quantitative research and technical analysis

Solutions – Provision of risk management strategies.

For a bank to qualify for star consideration in each category, it must receive at least 10 votes or 5% of the total votes cast (whichever is greater) for at least one question in that category.

In each category, clients rank liquidity providers on a scale of one to seven, with one being the top and indicating exceptional quality in that area of service. Scores are derived from these rankings by applying a numeric weighting of seven to a first-place ranking, six for second place, and so on.

To determine the stars in each category, the average scores for each question earned by a qualifying bank in that category are totalled and divided by the number of questions in that category to achieve an equal-weighted average.

The bank with the highest average score in each category receives a star. Any other bank within 5% of that high average score receives a star.

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