P&L Report Card: A recurring theme of this year’s awards is going to be familiarity – in that with so much work going on behind the scenes there were few major changes to the front-end product set at many institutions.
Regulatory compliance has been a big issue amongst the banks for several years now and it shows little sign of slowing down, with 2017’s hot topic being MiFID II, which was, as we have noted, this year’s number one theme. Having already been delayed once, some institutions are comfortable they have the right structure in place to remain compliant and to help their clients be so as well – others are less confident.
P&L Report Card: It seems hard to credit that just 18 months ago some very senior people in the banking industry were promoting the agency-only concept so strongly to Profit & Loss that we even started to think there might be something in it. As it turns out, there wasn’t, because the sheer number of liquidity events – let alone their severity – in FX markets has highlighted the value of a principal-based business.
It is quite amazing the impact that the odd price gap and (occasionally mini) flash move can have on thinking and we believe that the resurgence in interest in the single dealer platform in FX has, at its genesis, client concerns over liquidity.
P&L Report Card: It is becoming a familiar refrain of this section of the Digital FX Awards – true innovation is harder to find in this compliance dominated world. Put simply, half of the industry is not encouraged to think innovatively – and the other half doesn't want to! That is, of course, overstating the issue, for there are different thinkers in the industry, but inevitably when you are faced with such a broad and mature product offering, innovation is likely to take place at the edges.
Looking ahead, we are genuinely excited by some of the ideas coming out of places like Citi, JP Morgan, Credit Suisse, Morgan Stanley and BNP Paribas (others do exist before you all write to your MP/congressman!) but as always, the proof will be in the end product.
P&L Report Card: In past years, this award has been given to the bank that I believed was most likely to make a serious challenge in the next 12-24 months, however, it is probably time to change that ethos just a little. The reason is yet more evidence of the impact of regulation on the FX industry – with just about everybody racing to be compliant in dozens of different jurisdictions, each with their own nuance on the rules, nobody has the budget or time to make a serious move.
P&L Report Card: This remains the most interesting area of the FX market with not only customers continuing to study their best execution policies and more often than not, making changes, but also because the subject of market impact has really come to the fore over the past few months. This makes it an interesting time for the bank algo execution teams, because they are firmly front and centre when it comes to execution quality, and the quality of their strategies and market access is also open to more scrutiny than ever before.
P&L Report Card: A good indication of how much longer the development cycle is can be found in our assertion last year that in terms of institutions to watch in 2016-17, it could be a vintage year. It wasn’t. The impact of regulatory compliance dominated the scene to such an extent that few, if any, banks made a serious move forward over the past 12 months. Being the eternal optimists that we are, however, we feel that this time next year could be very different, not least because we have been given a few insights into plans for 2017-18 and some of them are quite exciting.
P&L Report Card: These awards cover most aspects of the client experience when it comes to the various e-services and products on offer, indeed a read back through 15 years shows how the categories have changed to reflect the changing demands of the client base and, sometimes in the short term, new areas of competition. It is now two years since we started polling users on the overall experience and what they liked and disliked about a platform and we continue to be grateful that the reaction to the award was positive. The Client Experience Award really represents the core ethos of these awards – how good is the overall experience for someone using these platforms?
P&L Report Card: This is the second year for this award, one that reflects the continued interest around understanding execution quality. While we look at the overall experience in our Best Execution Award, a crucial element in any client’s experience, especially in event-driven markets where liquidity can be sporadic, is the pretrade functionality, which is where we focus this award.
The past year has seen more clients understand the critical importance of the decision-making process, specifically when and how to execute that crucial hedge, or how to get into that position without tipping the world off to what you are doing (it can also work the same on the way out!) The changing nature of markets also makes the liquidity view important.
P&L Report Card: One of the more pleasing developments of the past few years has been the arrival and general acceptance of mobile trading. It is now accepted by clients (and importantly their compliance function) to the extent that a good mobile app can be a differentiator when selecting key relationships. We accept that mobile remains something of a niche market because there just aren't that many customers who want to execute out of hours, but those that do typically tend to be “valued” clients and as such, are important to the bank.That more people are using mobile devices for trading as well as information is thanks in no small way to the banks doing a great job of enhancing the security and compliance procedures around the process.
P&L Report Card: The rates space remains in a state of flux, in spite of regulatory certainty finally being established. The confusion – such as it is – stems from whether banks are principals in the business or not. The general mood is that they don't especially want to be, but as always, there are different thinkers. We continued to be uncertain going into this year’s awards process whether this award has merit given the general move towards SEF (or similar) trading, but we are happy to report the rates business has had a stay of execution from Profit & Loss for at least another year!