In the Profit & Loss 2018 Digital FX Awards, Barclays was the winner of the “One to Watch in 2018” category and, looking back now at the end of the year, it seems that the bank might be on its way to justifying this decision.
After a couple of years during which there was a clear slowdown in terms of product development within Barclays’ e-FX franchise, the bank appears to be shifting onto the front foot again.
It has made a raft of senior appointments within its FX business this year, with Alex Shterenberg hired as global head of G10 and EM e-FX trading, Jeremy Monnier as a managing director, Fabio Madar as the global head of G10 FX trading and distribution, James Hassett as global head of EM macro trading, and Mauricio Sada-Paz as global head of e-FICC product and distribution.
“This is a very exciting year for Barclays with hires across sales, trading and technology as we focus on increasing our penetration electronically and take our business to the next level,” says Sada-Paz.
Along with these hires, Barclays has adopted a new structure for its global markets business, with Nas Al-Khudairi promoted to oversee electronic trading across all asset classes within this division.
“Whether it’s governance, quants, technology, e-sales, compliance, or risk and control functions, we’re trying to make sure that – instead of existing in an individual asset class silo – all of our electronic services are looked at holistically to create synergies, drive growth and enrich our client experience,” explains Sada-Paz.
He adds that this holistic approach means that when the bank identifies products, solutions or best practices that it believes to be best in class, it can take them and apply them to other areas of its electronic business more easily.
One example of this approach in action is the launch of SPECS for FX that was rolled out to clients in June and then officially announced in October. Initially built for equities in 2015, SPECS is an online portal that allows clients to easily view, verify and request modifications to their FX electronic trading connectivity and settings with Barclays. This means that they can use the portal to determine user permissions and limits by product, currency enablements and trading platform access.
“At its heart, SPECS is a client transparency tool. It is a web-based self-service portal that all Barclays e-FX clients globally can use to view and manage their trading limits, permissions, and users. SPECS is a window into the Barclays e-FX trading infrastructure that gives clients a level of visibility and control over their trading relationships that they’ve never had before,” says John Hannigan, director, e-FICC distribution, at Barclays.
In developing the SPECS product for FX, Hannigan explains that Barclays tried to follow as many best practices from the equities version as possible and used a lot of the same technical infrastructure. But beyond that, he says that it had to be an entirely new build out because of the technology and data sets that SPECS was pointing to in the FX market.
Hannigan says that different clients are using the portal in different ways, with smaller firms often delegating operational oversight to the trading desk head who then sets the permissions and limits for all the other traders, and the largest institutions having individuals at the firm that are specifically tasked with managing the controls around the firm’s access to e-trading platforms.
“The useful thing about SPECS being web deployed is its flexibility; this is a differentiator because it means that client users will not require access to the trading platform itself to interact with and benefit from SPECS,” comments Hannigan.
Of course, providing easy access to e-trading controls and permissions is not exactly a new idea amongst the sell-side service providers. After all, Citi launched Command Centre way back in 2015. But while Hannigan concedes that clients increasingly expect such tools as a standard requirement, he insists that SPECS has some distinguishing features.
“I think that in general there is an industry trend toward giving clients a greater level of control over their ever-expanding digital footprint, and that clients expect this now more than ever, both professionally and in their daily lives. For this reason, we believe that the type of functionality offered by SPECS is ultimately going to be considered a requirement rather than a commercial differentiator, especially by clients with more sophisticated risk and control functions. But I think there are key features of the SPECS platform in particular that will help BARX and Barclays differentiate within this space,” says Hannigan.
He continues: “One unique feature that SPECS offers is the ability for clients to see their e-FX settings across vendor platforms as well as BARX FX. So if you’re a user that trades with us through our single-dealer platform as well as various other FIX connections or ECNs, SPECS shows you information across all of those venues, giving you a view that is much broader than what you would see for BARX FX alone.”
The decision was made to roll out SPECS to FX first in part because the bank believed in the strength of the BARX brand and technology and because it already had all the data that it would want to show its clients in-house.
But in terms of adapting technology from other asset classes, the traffic isn’t necessarily going to be all one–way. Sada-Paz says that Barclays is looking at ways to potentially leverage its Gator aggregation product, which was developed for the FX markets, for trading certain fixed income products as liquidity in those markets becomes more fragmented across different venues.
Elsewhere, Sada-Paz highlights a number of other rollouts that Barclays has planned within its e-FX franchise. He says that the bank has been re-investing in its algo platform and, as a result, plans to launch a new algo in January call BARX Peg, which will peg into the bank’s franchise liquidity. Later in the first quarter, Barclays then plans to launch a percentage of volume (PoV) algo, which executes an order as a percentage of volume trading in the markets.
In 2019, Barclays also plans to launch a Gator product for NDFs in response to client feedback, and indeed, Sada-Paz says that the bank has been making a big investment in its EM business, hiring new traders in London and Asia and working to improve the technology behind its NDFs and non-deliverable options products.
“We’re also investing in improving our product offering to the non-BARX venues,” adds Sada-Paz. “We are embracing a lot of the multi-dealers and we want to make sure that we can touch all of our clients through all the venues that they need.”
Profit & Loss noted during our e-FX reviews in April 2018 that “there is an air of optimism around BARX” that had been missing one or two years prior. With a changed business structure and vision, new staff hires and a series of planned product launches, this optimism might be well placed. As a result, it will be interesting to see whether, come April 2019, Barclays is in the running for additional awards.