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Verifying Trading Partners

BlackRock's High-End Risk Management Solution

FX Competition Heats Up

  • The foreign exchange trading world may be girding itself for a battle royale. FXall, the recently announced foreign exchange electronic trading platform formed by a consortium of 11 large banks led by Morgan Stanley, is likely to face competition from a rival consortium made up of the world's three largest foreign exchange dealers—Citigroup, Chase Manhattan Bank and Deutsche Bank.

    The new platform, reportedly named Atriax.com, would present FXall with stiff competition, since the three banks already capture 29 percent of the global foreign exchange volume. Sources say the Atriax consortium was put in place at the same time as Volbroker.com, the currency options consortium that was formed earlier this year. For reasons that remain unclear, however, Atriax hasn't been officially announced, whereas Volbroker.com is already processing its first trades.

  • Meanwhile, Volbroker recently announced that Royal Bank of Scotland and Deutsche Bank had exchanged a U.S. dollar/yen straddle over the service. The firm has also announced that it has more than 30 banks signed up. Current participants include Citibank, Deutsche Bank, UBS, Goldman Sachs, JP Morgan, Royal Bank of Scotland, ABN Amro, Bank of America, Barclays Capital, BNP Paris, Credit Suisse First Boston and Morgan Stanley Dean Witter. The company says it plans to cut the fees charged by voice brokers by as much as 25 percent.

  • TreasuryConnect, an Internet platform for institutional interest rate and currency derivatives, has announced two firsts. Xerox Corp. successfully executed the first non-U.S. dollar transaction over its trade execution platform. The Canadian dollar swap was executed on August 8. The company also announced that Toyota Motor Credit Corp. had purchased the first on-line interest rate cap on August 22.

  • An electronic trade services transaction-processing system was recently announced by American Management Systems, Barclays PLC, Bank of Montreal, and the Australia and New Zealand Banking Group. The new company will use Internet-based technology to reduce transaction-processing costs and to allow banks and their customers to initiate and track trade services transactions on-line.

  • The majority of banks have been slow to exploit the potential of electronic media, according to "The Forex and Forex Derivatives Study 2000,” a new study by ClientKnowledge.com.

  • More than 50 percent of the 1,700 corporates and investors surveyed did not log on to any bank web sites. "Research bells and whistles to not provide sufficient incentive for companies or investors to visit banks' web sites, but effective linkage between cash management and accounting systems through bank web sites would certainly make the difference,” says Justyn Trenner, CEO of ClientKnowledge.com.

    The study found that less than 10 percent of foreign exchange dealer clients use electronic trading facilities. Users of electronic systems, however, tend to move the overwhelming majority of their business to the electronic platform almost overnight.

    Both corporations and investors continue to place a high value on salespeople. "The predicted death of the salesperson in an electronically enabled dealing room is mistaken,” says Trenner. "The bank that makes money as business migrates to electronic media will be the one which has salespeople capable of winning exceptional deals on the basis of client understanding, and then of leveraging a wider share of business.”

  • Gaincapital.com announced that it has entered into a license agreement with Market News International to provide users with real-time foreign exchange news.