As buy-side workflows are becoming complex, these firms are looking for ways to simplify how they view and manage them, claims Basu Choudhury, business intelligence, Nex Traiana.
He says that, whereas in the past buy side firms used to probably have only one prime broker (PB), today they might have four or five prime brokers, or even have bilateral relationships. Further, when they execute they might do so via an anonymous venues or they might trade against another buy side firm that is using a prime broker.
“So what we’re seeing and hearing is that they want a single panel where they can see their PB relationships and bilateral, and even clearing at some point within one dashboard, one platform, where they can manage the matching, [confirmations] and settlements,” he says.
Cobalt, the shared back and middle office FX infrastructure provider, has unveiled its new credit management platform.
One of the issues that this credit engine attempts to solve for the market is the challenge faced by credit providers. Over the last ten years the number of prime brokers in the FX market has shrunk, in part because the risk of suffering a major loss from a defaulting client has in some cases failed to justify returns.
According to Cobalt, this risk is driven by the inability to allocate and manage credit at FX trading venues in real-time, meaning the party with the credit risk is often the last to know. By enabling central real-time credit management, the Cobalt claims that its platform overcomes these issues entirely.
Galen Stops examines the extent to which banks in different emerging markets face the same challenges when trying to build out their e-FX businesses, and questions the extent to which technology developments in these markets will follow a familiar pattern.
Talking broadly about how firms in emerging markets operate is often misleading, given the diversity of these markets and how widely the demands and conditions vary within each one. And yet, when it comes to banks in emerging markets that are looking to build out their e-FX businesses, there are some common themes that can be identified. For starters, these banks actually tend to have a sizable and often fairly diverse customer base, although each of these clients tend to trade FX on a smaller scale in terms of transaction size compared to their counterparts in more developed countries.