Skip to main content
RSS Feed

Latest FX Analysis

Digital FX Awards

2018 Client Experience Award P&L Report Card It is interesting to note how many banks are suddenly re-focused on the user experience or UX. The last time we saw this level of enthusiasm was probably 2010 following the high profile impact of Matrix, which says something about both clients’ rediscovered willingness to engage with the single dealer platform, as well as the push for greater analytics capabilities. Whatever the driver, users of platforms are much more demanding than they used to be in terms of how easy it is to use, move around and find what they are looking for. This also means that to stay at the top of the tree some attention has to be paid to the UX and this was difficult in a year in which MiFID II dominated so many budgets and resources.
P&L’s One to Watch in 2018 P&L Report Card With the shackles being thrown off at so many institutions in terms of budget and resources, this is an interesting category. Historically this award has been about the late movers, however last year we changed tack a little to reflect where we think the big moves will come from, meaning even those institutions with all-singing-all-dancing platforms were contenders. The development cycle’s length means it can be tricky to identify a mover in the succeeding 12 months and this can probably be used as an excuse for last year’s winner of this award, Bank of America Merrill Lynch, because the bank still seems to have some way to go. As noted, it is vital that the e-FX teams get budget if it is to continue to compete and build on what are some good, solid foundations.
Editor’s Choice Report Card Famously the most subjective of our awards, last year Colin shifted its focus so that, rather than being awarded to the bank perceived as most likely to challenge for supremacy in the single dealer space, it would go to the one that was most likely to win more awards than it did this year. I agree with the logic underpinning this change – namely that we’re at a point in time where it is unlikely that there will be, as Colin put it, a “serious move” in the single-dealer space – and thus will also embrace this approach. At the outset I’ll note that this criteria clearly disadvantages the platforms that traditionally win the most awards each year, even though we clearly think that these are the most well-rounded platforms available.
2018 Profit & Loss Innovation Award P&L Report Card With the words “MiFID II” ringing in our years we have to say that, yet again, last year was not a great one for innovation. We are sure that some great ideas exist – it’s just that the budget wasn’t available to make them a reality. Another factor in the slow down in innovation we have observed over the past few years is the maturity of the single dealer platform industry, when so many are full service, where do you go? Throw in the fear factor that still permeates the FX banking world and you still have people coming up with ideas, thankfully, but executing them is a difficult and arduous task – thanks mainly to “Dr No”, or the compliance teams as they are otherwise known.
Best Execution P&L Report Card Although several firms have been focused on this for years, it did seem like a year or two ago, a shroud was lifted from so many in the foreign exchange market and they were able to see what best execution really meant. Gone were the days of ringing your mate to get the deal done, or directing a trade to a provider as a “reward” for business elsewhere – suddenly FX execution was a big deal. If we are being honest we still think there are too many clients out there who don't take their FX execution seriously enough, but for those that do, the sell side has come up with solutions that offer plenty of choice.
Best FX Platform P&L Report Card It is fair to say that for the single dealer platform in FX the comeback is complete. Just a few years ago one could hardly move for predictions of the product’s demise, although it is noticeable that few, if any, major banks stopped investing. There was a hiatus of sorts at some institutions, but 2016 saw the realisation that investment is a continuous process and 2017 saw the first fruit of those investment seeds ripen. It has to be said, there are still one or two banks continuing to debate the need for investment in a single dealer platform, however the discussion is probably part of a wider conversation about the institution’s willingness to commit to FX full stop. At the top end of the table, investment dollars are not bountiful by any means, but they are there, and are being used.
Best Platform P&L Report Card Although there is still definitely a push towards homogenising asset classes on the part of some regulators, generally speaking the last few years have seen practitioners realise that FX in particular, cannot fit into any of the boxes they currently have labelled “equities”. Some banks went down this route and tried to lever FICC into the equities model and generally speaking it didn't go well – as shown by those institutions retreating back to their siloed models. This does not mean, however, that a strong multi-asset class offering cannot be built – it most certainly can, but it does mean there are inevitable challenges associated with doing so. First and probably foremost, which business runs the project? Even within FICC there are different drivers and requirements, throw in equities and the number multiplies by several magnitudes.
The 2018 Digital FX Awards Eye on the Client If one phrase could describe a year in financial markets, 2017 would definitely be the year of MiFID II – the regulation dominated a lot of headlines, thinking and, importantly, budgets throughout the year. In the single dealer platform space, this meant that if other work was done, it probably happened early in the year while people were still somewhat complacent about another delay to the regulation. Once we entered the second half of the year, the message from all banks was pretty much the same – technology budgets and resources were sucked up by MiFID II on a huge scale.
Best Platform 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.
Best FX Platform 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.