Tag: prime services

prime services

Re-Imagining the Prime Services Ecosystem

On a panel discussion entitled “The Twists and Turns of FXPB”, speakers at Profit & Loss Forex Network Chicago discussed the possibility for technology to radically re-shape the prime services ecosystem.

Technology’s impact on prime services was the jumping off point for the last panel at Profit & Loss Forex Network Chicago. Peter Plester, head of prime brokerage at Saxo Bank A/S highlighted the impact that technology had already in terms of risk management in this segment pointing out that the traditional plumbing for starting up a prime broker was to connect to NEX Traiana and the various ECNs and have STP for tickets, but that the central risk system internal to the PB was fairly manual.

A Closer Look At: Bespoke FXPB Systems

Marcus Butt, global head of FX prime services and futures at NatWest Markets, talks about how the bank is developing its FX Prime Brokerage offering in response to changing client needs.

Profit & Loss: So what are you doing on the FXPB side of your e-FX platform that you think differentiates your offering right now?

Marcus Butt: What we’re doing on the platform that is unique is really a reflection of what we’re doing in the business. Part of this is that we’ve introduced a number of new prime brokerage models to accommodate the diversification of our client base.

Profit & Loss Talk Series with Raj Sitlani

Raj Sitlani, co-founder of IS Prime and managing director of ISAM Capital Markets, sat down with Profit & Loss in Shanghai to talk about the challenges associated with expanding into Asian FX markets and why technology remains the key differentiator for prime-of-primes.

Profit & Loss: So what’s your business focus in Asia?

Raj Sitlani: We have a large market share in Australia but, until recently, never truly had the manpower or the resources to crack the broader Asia market. However, there’s a very big opportunity in the region for us to provide our flagship product – which is a prime-of-prime service with aggregated FX liquidity – and so last year we set up a Hong Kong office through which we can build out our presence in North Asia and China.

Why is BNY Mellon Launching an FXPB Service?

The announcement by BNY Mellon this week that it is launching an FX prime brokerage (FXPB) service is interesting for a couple of reasons.

Superficially, it bucks a trend that has developed in recent years of banks scaling back, or even shutting down, their FXPB businesses. However, Profit & Loss already argued in a special report looking at prime services published in Q3 2017, that this trend was beginning to reverse itself.

So perhaps more significant is that it indicates that the barriers to entry in FXPB have been lowered as the cost of technology and infrastructure has both decreased and become more available.

Saxo Launches Full Amount Execution for PoP

Saxo Bank has launched a new, full amount execution infrastructure for its prime-of-prime (PoP) service.

Running on dedicated infrastructure through the firm’s direct market access (DMA) liquidity hubs in London and New York, Saxo says the full amount execution capability provides lower market impact for large orders in FX and precious metals.

Demand has been driven by growth in small- to mid-sized institutional clients looking for direct market access and liquidity optimisation services.

Lucian Lauerman, global head of electronic distribution, comments: “We have grown our prime-of-prime business quite significantly and we are meeting increasing client demand for execution in large order sizes. To support efficient execution and sustainable liquidity access, we have set up a dedicated infrastructure allowing clients to execute in full amount through liquidity connectivity in both NY4 and LD4. This offers clients better pricing and lower market impact on larger tickets.”

BNY Mellon to Launch FXPB Service

BNY Mellon is launching an FX prime brokerage service for its institutional clients.

The custodian bank announced in a release today that the new service will launch “in early 2018”.

In the release, BNY Mellon says the service will allow institutional clients to access a significant new source of FX liquidity while helping streamline and reduce operational expenses, including legal and onboarding costs, as well as generating substantial capital and netting gains.

Users of the service will be able to transact a suite of FX products while also having access to pre- and post-trade services in addition to BNY Mellon’s collateral, funding and liquidity capabilities.

Capitolis: The Airbnb of Credit?

Galen Stops speaks to market sources about the feasibility of splitting prime services into credit provision and trade processing.

Capitolis is the latest venture headed by Gil Mandelzis, the former EBS BrokerTec and Traiana CEO. Mandelzis co-founded the company along with his former Icap and Traiana colleague, Igor Teleshevsky, and former Thomson Reuters CEO, Tom Glocer in New York earlier this year. Mandelzis operates as CEO of the firm, Teleshevsky is VP of R&D and Glocer is listed as an executive chairman.

OTCXN: Can Digital Solutions Bring Back FX Growth?

Galen Stops explains how OTCXN is applying blockchain technology to help firms access wholesale liquidity.

OTCXN seeks to leverage its own proprietary blockchain technology to solve what its CEO and founder, Rosario Ingargiola, says is currently the biggest challenge in the FX market: accessing wholesale liquidity.

This challenge is caused by a credit gap in the market, according to Ingargiola, that has in turn occurred because the banks have been broadly reducing the number of firms that they are willing to extend credit to.

OTC FX Options Clearing: Are Prime Services Ready?

They may both have been a long time in the pipeline, but the wait for CME and LCH’s introduction of OTC FX options clearing services is nearly over. Yet with both due to launch before the end of 2017, just how much appetite is there likely to be from the prime services sector to support these initiatives? Nicola Tavendale writes.

While there are many different ways institutions can try to reduce their capital costs, clearing is by far the most efficient, according to Paddy Boyle, head of ForexClear at LCH. And even before the advent of the uncleared margin rules, there were already significant benefits to clearing non-deliverable forwards (NDFs), both in terms of enhanced risk management and obtaining operational and capital efficiencies, he adds. “Since the uncleared margin rules were implemented in September 2016, clearing has become a much bigger priority for many firms,” Boyle says.

Making the Case for the Prime-of-Prime Model

The traditional assumption in the FX industry is that accessing a bank prime broker is always preferable to using a prime-of-prime. Galen Stops speaks to service providers seeking to challenge that assumption.

“One thing that’s quite interesting is that in the mindset of the FX industry, there’s a certain hierarchy,” says Jonathan Brewer, managing director of IS Prime. “There’s basically an assumption that if you want to participate in the FX market, then the pinnacle provider that you should aim for is a tier one prime broker (PB), and then you should only go and look for a prime-of-prime if, for whatever reason, your face didn’t fit at a tier one PB.”

Although to some degree this hierarchy might be psychologically driven, there are also very valid reasons why market participants might prefer an FXPB to a prime-of-prime (PoP) offering.