The Bank of New York (BNY) is planning several enhancements to its Internet-based FX service, iFX Manager, this Spring. The bank plans to begin adding electronic counterparties as part of the multibank feature of the service, and will release a new post-trade S.W.I.F.T. messaging capability to improve post-trade notification.
BNY launched iFX Manager in the US last summer, and began a full-blown marketing campaign during the first week of January. The US push was followed in February with the launch of the service in the UK and Europe.
The product, which was designed primarily for fund managers, is a completely automated FX trade order management and execution system, covering spot, forwards and swaps in 100 available currencies. The bank is exploring the possibility of adding FX derivatives to the service, according to Richard Estes, global product manager for iFX Manager.
Estes says interest in the product is coming from a number of areas. Fund managers require a good deal more functionality than the average corporate customer, so the service was built to handle block order execution across numerous fund accounts.
The multibank execution management facility, which routes trade requests to connected banks, and integrates with customer trading or portfolio management systems for real-time data transfer, is a capability that will become available once other banks link to iFX Manager. Estes expects to begin adding electronic counterparties later this quarter.
The architecture of iFX Manager is such that any bank with an Internet trading capability can be easily integrated. The benefit to clients is that, as electronic counterparties are added, users will have fewer manual entries to make. “The multibanked premise means that clients can manage all their transactions through a single system, rather than going to a number of different sites and manually entering trades,” says Estes. “This is where the true value is to clients.”
The planned post-trade messaging capability is already in demand by interested clients who have signed up for iFX Manager. The MT 304 is a S.W.I.F.T. message that instructs the custodian that a fund manager has done a trade with another bank, explains Estes. Many fund managers have moved away from trading with custodians, but operations managers still have to notify custodians of every deal they transact, he says. This type of service is valuable to some fund managers whose operations areas lack S.W.I.F.T. capabilities, or don’t want to pay the high cost of implementing them. “So it sends an electronic message to the custodian, thereby closing a loop in the straight-through processing for that [securities-related FX] business,” he adds.
“Over the past six to 12 months, the whole e-commerce model has been forcing banks to offer Internet-based FX trading. Now virtually every bank in the world is offering an Internet-based service, so the challenge is to differentiate yourself from everybody else. iFX Manager is not just about the two minutes of electronic interaction between the client and the bank trader – it’s primarily about all the other work that went into the trade before it was created, as well as the processing work after the trade has been executed, in addition to that two minutes of client and bank interaction. Clients are using iFX Manager as a work automation tool, not just as an Internet dealing system.”