The starting point for this award is that we think, finally, e-ratios in FX swaps are going to climb and also that at some stage there will be an ECN-type venue or venues servicing the major dealers. If that is indeed the case then at some stage inevitably thoughts will turn to the use of algos.
That may be some way off still, but there is a more pressing need identified by Credit Suisse and this is the impact of both the FX Global Code and, more pertinently, MiFID II on the FX swaps business. The bank has rolled out agency swaps which effectively allows the client to roll their spot executions forward and then provide a best execution report.
Agency swaps allows Credit Suisse to build higher quality liquidity pools in what is a very diverse market place and then demonstrate execution quality – something we believe will become even more important in the year ahead.
This is not Credit Suisse’s first foray into the e-FX swaps space, perhaps the first was a few years ahead of its time, however this time the bank has introduced a new concept that reduces both risk and variety of outcomes when customers are executing in the FX swaps market.
AES has long been the star of the Credit Suisse FX stable, and it remains a crucially important business for the bank – even as it rebuilds its principal franchise. The past few years have seen the bank caught by its competition in the algo execution space, and indeed there is still work to be done at the bank, however with its work in FX swaps, Credit Suisse could once again be thinking ahead of the pack.