Multi-bank forex trading is going online. Existing, interbank forex mechanisms are going to have to make way. This year the biggest forex banks have formed various consortia in a bid to secure a larger slice of the daily $1.5trn (e1.7trn) business. Online trading saves over 75% on traditional telephone trades and cuts out operational risk.
In June, Bank of America, Credit Suisse First Boston, Goldman Sachs, HSBC, Morgan Stanley Dean Whitter and UBS Warburg announced the creation of FXall.com, giving clients one-stop electronic access to forex services ranging from execution to research. The service should launch by the beginning of next year. FXall.com says it will offer live forex prices supplied simultaneously by participating dealers. It will also provide straight through processing, on line order entry and forex research and forecasts from the participating companies. “FXall.com will enable faster and cheaper FX transactions, resulting in even greater liquidity and transparency,” says Paul Kimball, chairman of FXall.com and co-head of foreign exchange at Morgan Stanley Dean Whitter.
Initial announcements promised leading-edge technology but, as yet, the consortium hasn’t picked a system. Competitors don’t doubt the might of the backers, though according to Stephen Smit, managing director of State Street’s e-trading system Global Link. “Right now it’s a little fuzzy – the product, the technology platform and the business and revenue model… they are all very powerful institutions though and ultimately they will deliver a very good product.”
The founder members have since recruited six further banks – BNP Paribas, Dresdner Kleinwort Benson, Bank of Tokyo Mitsubishi, Westpac, Royal Bank of Canada and Royal Bank of Scotland. In total the 13 now control over 30% of the forex market. Kimball says the consortium would welcome further participants and the group has tried unsuccessfully to lure Citibank, Chase Manhattan and Deutsche Bank into the agreement.
Instead, the three are going it alone and intend launching an internet- based foreign exchange platform, provisionally named Atriax, in conjunction with Reuters. According to Euromoney magazine, Deutsche commands 12.5% of the forex market, Chase 8.3% and Citigroup 8.1%, taking total share to about 29%. Citibank, Chase and Deutsche refusing to divulge details but it is believed the service will launch this month and should be fully operational within a year. Both Atriax and FXall are trying to lure other banks and the might of the two guarantee them market dominance. While the two systems will eventually fight over market leadership, there are systems already in operation.
State Street is one of the pioneers of internet forex trading and its FXconnect is the largest online platform functioning. State Street recently opened FXconnect to multiple counterparties and Deutsche, ABN Amro and Société Générale have signed up. Five other unnamed banks have joined. Smit says it is negotiating with 12 more institutions. Global Link, the platform accommodating FXconnect, has for four years been a proprietary system, but client pressure forced the bank to welcome other sell side institutions. “What clients wanted was an access point to allow them to transact with multiple counterparties, not just State Street.”
There’s overlap between existing and proposed systems and many of the institutions signed to Fxconnect are involved with other platforms. Smit says State Street has resisted approaches from other banks proposing tie-ups. “We want to give our clients the freedom to choose who they transact with,” he says. Volumes have doubled in the first six months this year and now account for over a quarter of the bank’s forex business. State Street approaches forex from the buyside, the fund manager’s side, and Smit says competition comes from sell side consortia, one such being Currenex.
Lori Mirek, a former Netscape employee, launched FXtrades, Currenex’s online multibank dealing system in April. Currenex is a third-party, non-bank portal giving both institutional and corporate clients access to forex quotes from more than 20 banks. Citibank and Chase, among others, recently launched online quotes for their corporate clients but Currenex and other multibank platforms top this by simultaneously providing numerous competitive quotes.
Spain’s Banco Santander, SocGen, Royal Bank of Scotland, Commerzbank and Italy’s Sanpaolo are launching a single electronic platform trading foreign exchange, fixed income and money market products, due to be operational by the first quarter of next year. IPE

Multi-bank forex trading is going online. Existing, interbank forex mechanisms are going to have to make way. This year the biggest forex banks have formed various consortia in a bid to secure a larger slice of the daily $1.5trn (e1.7trn) business. Online trading saves over 75% on traditional telephone trades and cuts out operational risk.
In June, Bank of America, Credit Suisse First Boston, Goldman Sachs, HSBC, Morgan Stanley Dean Whitter and UBS Warburg announced the creation of FXall.com, giving clients one-stop electronic access to forex services ranging from execution to research. The service should launch by the beginning of next year. FXall.com says it will offer live forex prices supplied simultaneously by participating dealers. It will also provide straight through processing, on line order entry and forex research and forecasts from the participating companies. “FXall.com will enable faster and cheaper FX transactions, resulting in even greater liquidity and transparency,” says Paul Kimball, chairman of FXall.com and co-head of foreign exchange at Morgan Stanley Dean Whitter.
Initial announcements promised leading-edge technology but, as yet, the consortium hasn’t picked a system. Competitors don’t doubt the might of the backers, though according to Stephen Smit, managing director of State Street’s e-trading system Global Link. “Right now it’s a little fuzzy – the product, the technology platform and the business and revenue model… they are all very powerful institutions though and ultimately they will deliver a very good product.”
The founder members have since recruited six further banks – BNP Paribas, Dresdner Kleinwort Benson, Bank of Tokyo Mitsubishi, Westpac, Royal Bank of Canada and Royal Bank of Scotland. In total the 13 now control over 30% of the forex market. Kimball says the consortium would welcome further participants and the group has tried unsuccessfully to lure Citibank, Chase Manhattan and Deutsche Bank into the agreement.
Instead, the three are going it alone and intend launching an internet- based foreign exchange platform, provisionally named Atriax, in conjunction with Reuters. According to Euromoney magazine, Deutsche commands 12.5% of the forex market, Chase 8.3% and Citigroup 8.1%, taking total share to about 29%. Citibank, Chase and Deutsche refusing to divulge details but it is believed the service will launch this month and should be fully operational within a year. Both Atriax and FXall are trying to lure other banks and the might of the two guarantee them market dominance. While the two systems will eventually fight over market leadership, there are systems already in operation.
State Street is one of the pioneers of internet forex trading and its FXconnect is the largest online platform functioning. State Street recently opened FXconnect to multiple counterparties and Deutsche, ABN Amro and Société Générale have signed up. Five other unnamed banks have joined. Smit says it is negotiating with 12 more institutions. Global Link, the platform accommodating FXconnect, has for four years been a proprietary system, but client pressure forced the bank to welcome other sell side institutions. “What clients wanted was an access point to allow them to transact with multiple counterparties, not just State Street.”
There’s overlap between existing and proposed systems and many of the institutions signed to Fxconnect are involved with other platforms. Smit says State Street has resisted approaches from other banks proposing tie-ups. “We want to give our clients the freedom to choose who they transact with,” he says. Volumes have doubled in the first six months this year and now account for over a quarter of the bank’s forex business. State Street approaches forex from the buyside, the fund manager’s side, and Smit says competition comes from sell side consortia, one such being Currenex.
Lori Mirek, a former Netscape employee, launched FXtrades, Currenex’s online multibank dealing system in April. Currenex is a third-party, non-bank portal giving both institutional and corporate clients access to forex quotes from more than 20 banks. Citibank and Chase, among others, recently launched online quotes for their corporate clients but Currenex and other multibank platforms top this by simultaneously providing numerous competitive quotes.
Spain’s Banco Santander, SocGen, Royal Bank of Scotland, Commerzbank and Italy’s Sanpaolo are launching a single electronic platform trading foreign exchange, fixed income and money market products, due to be operational by the first quarter of next year. IPE