The return of volatility in FX last year created the necessary environment for relationship-based trading between banks and their clients. When volatility hits, market participants tend to want to execute with certainty.
Citi’s decision last month to consolidate its e-FX trading platforms into a new single-dealer platform was a reminder of the extent to which banks are pushing their own trading infrastructure as a better option than multi-dealer platforms.
Other banks have extended the functionality of their platforms, with UBS pushing the boundaries on the amount of liquidity provided to clients electronically by offering up to €500 million notional on its single-dealer platform.
“The direct nature of trading through single-dealer platforms can provide stability and reassurance to clients when markets are moving, especially as bank platforms have become increasingly sophisticated, with ultra-low latency and high throughput,” explains Vikas Srivastava, chief revenue officer at Integral.
David Leigh, head of electronic FX trading at Deutsche Bank, refers to increased client engagement as banks put more capability and resources on to single-dealer platforms.
“Volumes are driven by clients in pursuit not just of faster, web-based services but also the desire for more intelligent integration, pre-trade analytics, studies and market colour,” he says.
