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Battle Heats Up Between Rival Online FX Portals

As the respective launch dates for rival online FX portals FXall and Atriax near, both consortiums have added liquidity providers and enhanced their initial offerings. In addition to these two platforms, State Street has added another liquidity provider and Currenex has further enhanced its offering.

FXall has named its senior management – Phil Weisberg, acting CEO, has been appointed to the role permanently, while John Cooley is CFO, Mike Mendes is COO and Mark Warms is chief marketing officer.

The FXall consortium has unveiled several Web site enhancements, including demo trading, live quotes and research. Weisberg says FXall is on target to meet its Q1 launch date.

FXall Trading Demo previews the online trading process and walks users through the steps required to execute a trade. The demo features the FXall QuickTrade function, which provides customers with instantaneous responses to price requests. The demo also previews the FXall PortfolioTrade tool that allows users to upload and seamlessly execute complex trading requirements. The live dealing site will offer spot, forward, swap and option trades.

FXall Quotes will provide spot, forward and FX option prices, tracking market moves in real-time. FXall also combines the indicative quotes into a “blended rate” and applies filtering techniques to provide an indication of where the market is trading.

FXall Research features currency analysis and forecasts from FXall’s liquidity providers.

FXall Market News provides summaries and articles on the latest global, regional, economic and FX market news. The service is provided by Reuters, among others.

Meanwhile, 17 more banks joined the now 31-strong platform last month, including ABN Amro, Bank of Montreal, Barclays Capital, Bear Stearns, Brown Brothers Harriman, DG Bank AG, Erste Bank, HypoVereinsbank, ING Barings, Lehman Brothers, Mellon Bank, Lloyds TSB, the Nomura Trust & Banking Co, Scotia Capital and three non-disclosed banks. The Customer Advisory Board has also been expanded to 27 members since it was first announced in November, up from 14 initially.

Atriax Adds New Bank Members

Not to be outdone, seven more banks have joined the Atriax consortium: Banca di Roma, Commerzbank, DG Bank, Erste Bank, HypoVereinsbank, Israel Discount Bank of New York and Lloyds TSB Bank. The Atriax membership now includes 58 banks, representing an estimated two-thirds of the FX market.

Meanwhile, Toshiba Corporation has agreed to join the Atriax Advisory Board of 25 global corporate and institutional members.

Atriax is now authorised to operate in a total of 42 countries, with the recent addition of Ecuador, Germany, Honduras, Indonesia, Panama, Peru, Romania, South Africa, Thailand and Turkey.

Since launch late last year, Atriax has added several enhancements, including an FX forecast grid, which enables users to compare the exchange rate forecasts from member banks, and an Atriax Sentiment Index, which synthesises the divergence of forecasts from the relevant forward rates into a single measure for each currency pair.

Data coverage has also been expanded, including 24 new cross-rate displays and the ability to view multiple spot rates.

Atriax has also released a “complete and robust integration technology” using an Application Programming Interface (API) which allows autodealing integration into the Atriax dealing engine. The API has a simple implementation for integration over the Internet using http and https, or a much more robust implementation using the Atriax controlled extranet and a Java/JMS implementation of the API, say Atriax officials.

Atriax was founded by JPMorgan Chase, Citibank, Deutsche Bank and Reuters and launched on 24 October. An execution function is planned for a Q2 release, pending regulatory approval.

Atriax plans to allow any two counterparties to trade on the system, including both buy and sell side institutions.

“At present, FX banks bundle the cost of all their products and services into the bid/offer spread. The first of these is the provision of content, such as research and other value-added services. The second and third are credit and market risk, which the banks intermediate. The fourth is settlement. Banks currently settle all their own trades. In time, banks will focus on their core strengths and outsource the remaining functions, concentrating on some but probably not all of these four areas,” says Atriax CEO Dan Morehead.

“Incidentally, a feature of the Atriax platform will have an autodealing capability where, if a customer can’t get an FXquote in a particular currency pair from, say Bank A, this request is seamlessly passed on to Bank B. The market risk is taken by Bank B, while the credit risk is taken by Bank A,” he continues. “It is also likely that a direct prime brokerage model will develop. In the previous example, the customer goes direct to Bank B for the quote, then ‘gives up’ the settlement to Bank A. The fourth product, settlement, will become highly automated and much more sophisticated, with bilateral and multilateral netting becoming the norm. One of the clearest business principles to emerge in the past few years is the need to ‘do what you do the best and outsource the rest’.”

Several different trading engines will be used on the platform, and Morehead says counterparties can determine such aspects as how tight spreads are quoted and how long those prices are posted.

“To date, the FX industry has bundled all its services in the hope that clients will pay or it. Portals will enable banks to unbundle the provision of services and charge discreetly for individual services,” says Morehead. “Portals allows users to disaggregate market, credit and settlement risk.”


Separately, the Royal Bank of Scotland Financial Markets has joined State Street’s Global Link online trading platform as a liquidity provider on the forex component, FX Connect. RBS will be the first bank to offer futures trading and clearing capabilities over the State Street platform. FX Connect now has 22 participating banks.

Steve Smit, managing director of Global Link Europe, says RBS expands the base of tier-one bank counterparties participating in the bank’s FX e-network. “It will increase the liquidity and flexibility available through the system for the platform’s users,” he says.

Smit adds that the deal also represents a major step towards further diversifying the range of products available on the platform.

“RBS, incorporating what was Greenwich NatWest, is a significant player in the global futures market. This agreement underlines our commitment to ensure that Global Link is a truly multi-asset platform. RBS’s futures and clearing expertise adds value for Global Link users, providing electronic access to a growing market.”

Brian Crowe, managing director for RBS Financial Markets, says the move to offer its futures and clearing capability, and to serve as a liquidity provider, is key to the bank’s future growth.

“We see these as significant elements in our strategy of being able to serve our clients through whichever trading platforms they may choose and for diversifying the distribution of both our futures and forex products. Through Global Link’s FX Connect, we will be able to provide our clients with the liquidity and choice they require through an extremely efficient and cost effective electronic format,” says Crowe.

State Street says its Global Link private network is currently used by 262 asset management companies, including 15 of the world’s 20 largest players, across 21 countries. It offers market research, analytics and trade execution services across multiple assets classes – including FX, equities and fixed income.


Meanwhile, Merrill Lynch has joined Currenex, the reverse auction matching service developed by a Silicon Valley-based software provider. The multi-contributor FX portal launched in April 2000.

The Internet-based platform now has more than 25 banks signed up to provide prices to the online trading service, FXtrades.

“Merrill Lynch is committed to partnering with top technology providers to drive change in the structure of markets for the benefit of our clients,” says Keith Jacobson, managing director and global head of FX at Merrill Lynch. “This partnership with Currenex will significantly enhance our online offerings to clients who trade in FX products.”

Currenex has recently formed a partnership with Simcorp to provide a combination of online FX trading with straight-through processing (STP) services to their joint corporate treasury customers. FXtrades will be combined with Simcorp’s IT/2, an investment and treasury management system which provides integrated cash, deal and risk management.

Simcorp develops, supplies and supports corporate treasury and investment management systems, as well as a range of financial modelling tools.

Furthermore, Currenex is rolling out a new order management function which provides an increased range of price request types supporting “Limit Order”, “At Best”, “No Worse Than”, and “Stop Loss” orders. Existing price methods are also being enhanced to allow clients to roll spot trades forward.

In December, Currenex launched Exclusive First Quote, which enables members to request immediate quotes from a single bank of their choice without entering into an auction.

Currenex FXtrades members will also have access to’s MultexINET, a real-time online service that provides a library of fundamental bank research from more than 750 firms, with members having the opportunity to subscribe to the full range of Multex products. As well as this, members will have access to fully interactive, real-time FX technical analysis charts from Tradermade International. With Tradermade, members will be able to analyse trading activity across 20 currency pairs.

Bloomberg has entered the fray, making headway with its version of the multibank FX platform – FX Go – which now has 31 banks live on the system since its first release last June (see story page X). The service links participating banks with clients using the Bloomberg Professional Service.

Who will prevail?

Already, the names of two multi-contributor portals have already been integrated with larger rivals – CFOWeb and MarketMarque. CFOWeb, developed by Integral Development Corp, will provide the RFQ engine technology for Atriax, while the main aspects of MarketMarque, the joint venture between Bank of New York and AVT Technologies, are being incorporated into the FXall platform.

Before Atriax and FXall have even launched, market participants have been betting on which platform will ultimately prevail. But, if the competition for marketshare in the interbank spot FX market is anything to go by, we may see the two platforms find their own niche – be it by client type, region, products or currency pairs. In the interbank spot FX market, EBS has established itself as the de facto marketplace for spot trading in the major currencies, while Reuters has found a niche in the minor and emerging markets. The key to EBS’s success, many say, is that the banks own it, and therefore provided the early support to ensure it prevailed over its rival. But the situation today is much different, as several of these multi-contributor portals are bank-owned and supported.

Therefore, many industry leaders predict an eventual consolidation of these liquidity pools, but just how this will occur remains to be seen. Will they merge, fold or link?

“I think we will see multiple platforms that will link their liquidity pools to survive,” says John-Pascal Van Houden, global head of marketing and sales for Financial Market Solutions in Seattle. “I think there will eventually be a Nasdaq for FX. In the next five years, there will be a common exchange for FX.”

Simon Wilson-Taylor, State Street’s senior vice president and head of Global Link, believes that it will be the clients that decide which platform best suits their needs – and this will be based on factors ranging from research and pricing to back office support and portfolio management.

However, Richard Estes, head of FX e-commerce at Bank of New York, believes that ultimately the ball is in the banks’ court. “Costs will eventually decide which platforms a bank supports. Last year, one bank signed up to four different platforms – FXall, Atriax, State Street and Currenex. When it comes time to do live trading on all four platforms, that bank will meet with a considerable expense if all the platforms do not have identical connectivity to their own rate engine. It will be that bank’s responsibility to build this interface. So you must weigh the benefits of participating in several portals.”

But these discussions may be putting the cart ahead of the horse – at least until the market hears the outcome of the current US Department of Justice anti-trust investigation into the legality of these fixed income and FX portals.


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