[ T R A D E T E C H
Banks hail ‘golden
age’ in FX amid
evolving buy-side
relationships
Panel of major banks at TradeTech FX agree the sell-
side has changed the mentality around new product
development, as the buy-side seeks increased
automation and integration.
F
oreign exchange trading busi-
nesses at sell-side institutions
are experiencing a ‘golden age’
in comparison to equities and
fixed income, as banks continue
to adapt to the buy-side’s needs
in terms of new product develop-
ment.
Speaking at this year’s Tra-
deTech FX Europe conference,
panelists from major investment
banks agreed that in this new age,
developing new products and
technologies on behalf of clients
is not the same process as it used
to be. Diminished resources also
means that the sell-side can no
longer build ‘anything and ev-
erything’ for the buy-side, as was
once the case.
“We are living in interesting
times as banks pull out of equities
and fixed income,” said David
Wilkins, head of global eFX sales
at Goldman Sachs. “But that’s
not the case for FX where we are
seeing a golden age on the sell-
side. The mentality and mindset
around how we develop products,
and the way our clients use those
products, is changing.
“Across the industry, we have
limited technology spend, so we
can’t just endlessly build every-
thing for clients and hope they
will use it. We need to take a more
consultative approach as to how
we build, and listen to clients. Any
client I speak to in any part of the
world is trying to automate their
business in some kind of sense,
but the days of ‘here is our spec,
come and integrate with us’, are
over. Now, it’s about how we can
integrate with them using open
architecture and systems.”
Joe Nash, FX and local markets
digital COO at BNP Paribas, which
launched the latest version of its
Cortex LIVE FX trading platform
at the event, agreed with Wilkins,
adding that the pressures facing
the buy-side are also being felt
on the sell-side. Cost savings are
F X
E U R O P E
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now being driven by integrating
operating systems, as opposed to
spread pressures.
“The days of developing a prod-
uct and seeing what sticks with
clients are over. We don’t have the
resources on the sell-side either,”
Nash said. “We need to target the
limited resources we have to help
clients automate the workflow for
cost efficiencies. It’s the next-gen-
eration of tools as the industry
moves from manual processes to
automated processes.”
Wilkins from Goldman Sachs
continued that challenges for
the sell-side with innovating
and delivering new solutions to
clients occur when the individual
buy-side firms seek similar, but
differentiated products, meaning
banks have to adapt to satisfy
those requirements.
“The buy-side must be aware
of this,” Wilkins said. “It can be
infuriating for us when a client
changes their execution manage-
ment system or order manage-
ment system every two years, and
we need to work hard and do our
homework to work with them
again. It’s a challenge for us, but
the buy-side need to be aware that
there is a big risk with switching
systems often.”
Other new methods on the
sell-side to innovate for clients,
according to the panel, include
partnering with and presenting
FinTech firms that could help
with certain challenges on the
buy-side. The global head of
eFICC product and distribution
at Barclays, Mauricio Sada-Paz,
told delegates that the innovation
incubator is a good method to do
this.
“There are FinTech firms
moving into the industry to solve
major challenges, but the buy-side
simply don’t have the time to meet
every single one,” Sada-Paz said.
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