New York-based Brown Brothers Harriman (BBH), the 182-year-old private bank, is due to begin Web-based FX trading, FX Worldview, using Cognotec’s AutoDeal LITE product for internal client trading on 8 May, followed by a wider rollout to global investors.
“We are global custodians, so we are trying to develop Web-based products for cross border investors that tie their securities transactions with their FX requirements,” says Michael McConnell, partner in charge of BBH’s treasury activities.
BBH operates 24-hours a day from just one office in New York that services clients’ needs in 85 economies, making markets in any currency a customer requires. The FX team is comprised of seven traders, eight relationship managers, a four-person economic team, and a middle office for a total of 25 staff.
Under McConnell, the two principals are Managing Director Peter Lorraine, who heads the FX group, and Bill Tyree, who oversees treasury services and asset/liability management. Senior Vice President Jeffrey Scott heads the relationship management group, while SVP Charles Spratt oversees dealing. SVP and Senior Economist Anne Mills is the head of currency research.
“We have a very experienced team with virtually no turnover,” says McConnell. “The minimum dealing desk experience is seven years and the newest senior vice president on the desk has 10 years with the bank.”
BBH is targeting between five and 10 internal clients for its 8 May launch, and then will release the service externally to handle simple autodealing functions, says McConnell.
“I envision it being a communications tool at first, providing another means for clients to come to our dealers for a direct price. The dealer intervention mode is extremely dynamic – we can set any combination of 90 variables, from currency pair, deal size, market, volatility or client,” adds Scott.
Because custodial business is a unique process – a single order turns into scores of individual trades based on a single price, BBH is working with Cognotec to develop a new allocation fund, which is due out in June. Scott adds that Cognotec is also working on a chat function, which should be available by November.
“Our business tends to be comprised of a select group of very large clients – 50 to 100 client families means a couple of thousand relationships,” says McConnell. “While our FX team is relatively small, the average FX book has more than $15 billion.”
“It will be very important to gauge our clients’ acceptance of the service, because banks are used to electronic venues, but clients may not be as comfortable. A lot remains to be seen whether or not they will find it useful, but the trade allocation aspect should provide a very important service,” adds McConnell.