Charles Schwab Corporation and Barclays Plc have announced plans to jointly develop and operate a fully automated FX facility, which is due to begin rolling out to customers by the end of this year.
The aim of the Schwab/Barclays FX facility is to allow investors using Schwab’s online brokerage services to buy and sell securities in different FX markets without the need for separately negotiated FX contracts, says Schwab. In addition, in countries where Schwab’s affiliates are licensed to trade on local exchanges, the FX facility will enable customers to move funds between accounts denominated in different currencies.
Barclays Capital, the investment banking arm of Barclays Group, will provide the live FX pricing and execute the FX transactions with Schwab. Schwab’s Web interface will relay relevant exchange rate information to customers and process the FX transaction automatically in parallel with the securities trade.
Fees for using the FX facility will vary depending on the currency and size of the transaction.
“Online trading is flourishing in international markets and, naturally, investors are looking for opportunities outside their home markets. With the FX facility, we intend to provide them with a seamless end-to-end trading experience,” says chairman and co-CEO Charles Schwab.
Barclays Capital has completed testing its Internet-based FX dealing system. In addition to real-time pricing and execution, the FX service offers research and analytics, order management facilities and a chat room.
The “transactionally oriented” FX dealing system is now in trials with customers. “with a number of clients located principally in Europe”, according to Paul Thrush, global head of FX, who also sits on the bank’s e-commerce steering committee in London.
The system will have functionality for any FX product, primarily cash, with further development planned in derivatives. The planned FX options-based products should be released by Q3, says Thrush. Web development was conducted in-house.
The service, which will provide straight-through processing and a confirmation capacity, is targeted at Barclays’ corporate and institutional client base, the latter of which Thrush defines as asset managers and hedge funds.
“The foreign exchange market is a natural home for Internet-based banking services,” says Thrush. “It is probably the most commoditised of all the wholesale financial markets, and demands a dealing and processing system that takes full advantage of the latest technology. This service will make FX dealing faster and cheaper for our clients, while maintaining the high levels of security that are traditionally associated with this market.”