Month: March 2017

Best Corporate Platform

P&L Report Card: The key to a superb service to corporate FX clients remains flexibility and the ability to provide for a huge range of customers. From the biggest multinational with its very sophisticated technology and execution desk, through the standard corporate hedging desk, down to the corporation seeking to make international payments, no other client segment offers such a broad spectrum. Inevitably, given how the focus for years was on volume and market share, the top end of corporate town is well catered for by just about every bank.

Likewise, several banks have solutions for payments.

Best Banks Platform

P&L Report Card: Yes, we are going to start with our annual reminder that servicing one’s peers is always the hardest task, mainly because their background is similar; they could be potential competitors, and as far as service levels go, they are very demanding! The past two years has seen more banks come up the curve in terms of technical knowhow and product development, so servicing this critical segment becomes even more challenging – for both parties.

Whilst the global bank has to capture some value from the flow, the regional players’ need to provide best execution means they are a lot more selective when it comes to where they trade.

Super Regional Award 2017

P&L Report Card: We have to repeat ourselves at the start of this award write up. There is, as we have experienced over the past three years, a degree of sensitivity over who we consider “regional” or “super regional”! Generally speaking we have sought to target this award at banks from outside the top 10 e-FX institutions that are helping regional customers. It’s part emerging markets and part technology provider. The field is quite broad for this award, anyone who, for example, empowers customers and other banks can be considered, but we want that little twist that is a focus on certain regions.

Best Emerging Markets

P&L Report Card: The last year has seen the final breaking down of barriers between emerging markets and G10, helped in part, it has to be said, by the odd liquidity event in G10! A big factor in the blending of the (major) emerging markets and G10 has been the ability of the non-bank players to really get into the former, firstly via NDFs but then in the cash markets. One or two multi-dealer platforms are helping the process and generally speaking, data appears to be improving – this remains the lifeblood of the non-bank market maker. Of course, if we thought that market impact was an issue in the G10, imagine how people feel about it in EM?

2017 Product of the Year

P&L Report Card: The development cycle means this category has fewer new entrants than other years, but that is not to say there are not some great products out there, it’s just that, as we have noted in previous years, this award seeks to recognise new products, that while the idea behind them may not be innovative per se, they do help customers navigate the sometimes tricky waters of the FX market.

As we have just noted, JP Morgan’s commodities offering has taken off in the past 12 months, making it a contender. Similarly, it has been a big year for Morgan Stanley with its development and release cycle that has seen the physical keyboard, Fusion Edge and QSI analytics, all seriously enhanced.

Best Commodities Platform

P&L Report Card: This really is a story of two institutions. Yes, there are many excellent precious metals providers out there but telling them apart is different, and yes, an increasing number of players are offering options on precious metals, as well as more cross currency opportunities. The fact is though that precious metals are viewed by investors, and us here at Profit & Loss, as just another currency pair.

This means we tend to look further afield when looking at commodity providers, especially into the base metals and energy products. With this in mind, and given there are two very good providers – Goldman Sachs and JP Morgan – that stand out from the crowd, we are going to ruin the suspense of this award by highlighting the excellence of both platforms, one here and one in the award winner’s section.

Best Rates Platform

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!

Best Mobile Platform

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.

Best FX Options Platform

P&L Report Card: For yet another year we were thinking (yes, we know that should read “hoping”) that 2017 would be the year in which the FX options market’s structure was finally sorted out. We were optimistic over the availability of clearing services, customers were more open to structured solutions to their hedging problems, and the multi-dealer world – something we consider to be important for a market’s development – was looking up. A year on? Well not a lot has happened.

Volumes continue to struggle in the public markets and clearing has not taken off, but at least the event-driven nature of markets means that customers still see value in FX options. So, the future of the market is no closer to being defined than it was a year ago (actually, if we are being honest, four years ago).

Market View Award

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.