UBS has demonstrated resilience and adaptability in the face of significant organizational changes and challenging market conditions, maintaining a strong focus on differentiated client service through consistent liquidity provision, competitive pricing and innovative content.
UBS’s acquisition of Credit Suisse prompted extensive integration across its institutional and wealth management businesses. This integration has opened new opportunities in market-making, with UBS having expanded from being active on just one electronic communication network (ECN) to three – Hotspot, Curex and LMAX – with plans in place to join additional ECNs. As a result, UBS has seen a notable increase in its API business.
This expansion has been complemented by targeted outreach efforts, particularly with Credit Suisse Global Wealth Management and Swiss institutional clients contributing to an increase in spot average daily volume (ADV), reflecting UBS's ability to leverage its broadened FX offerings to attract more business. Another key focus has been the bank’s growth in MENA currency pairs, which, despite contributing only 0.1% of total April ADV, accounted for 1% of revenues.
The bank aims to be the most data-driven, technology-enabled business in the FX sector. One strategic development in line with this aim was the deployment of AI and machine learning techniques to improve client pricing on request-for-quote (RFQ) inquiries, resulting in a notable increase in trading flow. The bank also implemented an innovative client pricing optimization system based on decision-tree and non-parametric survival analysis, allowing for systematic improvements in client pricing.
Additionally, UBS introduced region-specific core pricing to reflect local market conditions, which helped avoid adverse selection while improving pricing for latency-sensitive clients. The bank strengthened its pricing and risk management infrastructure in the APAC region by enhancing its Singapore datacentre, reducing latency by up to 30 milliseconds.
UBS also invested in new operational features on its single-dealer platform, Neo. These included new navigation on its price store and the introduction of natural language processing to its platform search logic. Improvements were also made to the FX trade and order blotter, mobile apps and pre- and post-trade allocation systems, enhancing the overall user experience and operational efficiency.
This approach has contributed to a 16% year-on-year increase in spot eFX in the first half of 2024. The bank also demonstrated an over 40% market share increase in Scandinavian currency, and maintained its strong positions in other EMEA currencies like PLN, HUF, ILS, TRY and CZK, with market share above 20%.
“Our clients greatly value our longstanding commitment to provide robust FX spot liquidity during all market conditions,” says Paul Buttenmueller, global head of e-FX trading.
“The recent episodes of volatility have highlighted the stability and scalability of the UBS FX platform. Our continuous investment has allowed us to expand into additional currencies and further enhance our global market share.”