One of the most interesting findings from CitiFX’s latest vendor review – published at the end of July – was that many buy-side firms accept that even though their FX vendors could be doing better in key areas, the benefits of jumping ship would be outweighed by the time and effort required to set up with a new provider.
The vast majority (87%) of the corporates, asset managers and hedge fund managers surveyed said they were satisfied with their primary FX vendor. Fewer than one in five were seeking new providers, compared with more than 50% just two years ago.
One of the possible explanations for this decline is that although the number of venues has increased in recent years, they have become so deeply customised and integrated to clients’ internal systems that clients simply cannot face extricating themselves.
Alex Dunegan, chief executive of Lumint Currency Management, agrees that increased integration of execution venues into client systems makes it easier for them to stay with their existing providers and workflows and observes that such a high level of integration is hard to interrupt.
