Smaller prime brokers find new ways to gain foothold on slippery FX ladder

Offering FX and non-FX services via a shared platform is a key trend in the boutique prime brokerage market, particularly when servicing clients who need to be able to optimize their collateral by using a limited number of intermediaries.

Larger institutions have the operational capabilities to use different brokers that specialize in different markets, says Peter Plester, head of FX prime brokerage at Saxo Bank, who observes that for smaller institutions it is necessary to access multi-asset services from a balance sheet and operational perspective.

Working across multiple asset classes, combining FX prime brokerage, over-the-counter (OTC) clearing and listed derivatives/futures clearing as a single offering, is a no-brainer, says Fred Allatt, managing director for North America FX sales at INTL FCStone.

“It is a more capital-usage effective relationship for both, allowing clients to access multi-asset execution and clearing in one place, while the clearing firm can maintain a holistic view of its entire client portfolio,” he says.

A growing number of non-banks are also looking to provide research and listed derivative clearing services, coupled with electronic- and voice-execution services to reduce the product gap between non-banks and the tier-one prime brokers.