Societe Generale has become the 15th liquidity provider to join FX SpotStream – it joins just months after Barclays was unveiled as LP number 14.
“After announcing the addition of Barclays last quarter, we continue the momentum and are pleased to welcome Societe Generale as the 15th liquidity provider on our Service – we expect to have the bank live globally before the end of Q2,” says Alan Schwarz, CEO of FX SpotStream. “The number of clients to go live in Q1 2020 was up 19% on the same quarter in 2019 and NDF and forwards volume also grew significantly, by 87% and 194% respectively over the same period. SocGen brings significant strength in emerging markets as well as G10 and will helps us continue this geographical and product growth.”
As to those markets in which SocGen can provide a real differentiator, Alex Dewhurst, head of FX and emerging markets sales at the bank points to Asian NDFs, central and eastern Europe and Africa as the bank’s calling card. “We have a very strong G10 franchise and we continue to grow our e-distribution franchise globally,” he explains. “But it is how we have grown our e-book elsewhere in the value chain, specifically in emerging markets, that we believe we can make a difference. FXSpotStream offers us the opportunity to broaden our distribution base further.”
The bank and service have had a “strong relationship” for some time they say, adding that transforming this into SocGen’s presence as an LP on FXSpotStream was an obvious next step. “We have been witnessing the growth of FXSpotStream and more and more of our clients have been asking us if we are on it, making the business case for joining very clear as we seek to leverage the network and build our distribution base in a very efficient fashion,” adds Dewhurst.
Schwarz says that while the growth did come from a small base, the increase in non-spot trading on FXSpotStream is “a real growth story for us”. He adds, “Spot has become a commoditised business but we are seeing tremendous interest in EM and NDFs in particular and that is why it made sense to add SocGen as an LP. We are thankful and appreciative of the number of LPs who ask to join the service but we take a very thoughtful and methodical approach to building the service. We need to ensure that we are adding LPs who are going to provide something tangible to the service and for our clients and in SocGen’s EM franchise we are offering the bank more distribution points and our clients additional liquidity to consume.”
While volumes have inevitably dropped back from March’s highs, Schwarz continues to be bullish over the FXSpotStream model and Dewhurst agrees, observing that the when the discussion moves away from the spot markets into specific liquidity such as EM, forwards and swaps, “a strong relationship remains a key component.”
Certainly the longer term evidence is that relationship based, disclosed, liquidity channels do seem to be gathering strength and unsurprisingly Schwarz agrees. “We have seen the interest and willingness to engage on a disclosed basis increase again since March. When clients look at the key factors in their trading such as price, market impact, information leakage and fill rates – the things that matter to clients when they need to get done – the disclosed channels work especially well during volatile times – and March merely highlighted that.”