Banks widen scope of IT budgets

Jeremy Hill, head of foreign exchange and money-market operations at Royal Bank of Scotland (RBS), said that in the past few years RBS’s primary focus has been on managing capacity to cope with the exponential growth in volumes seen from its high-frequency trading, prime-brokerage and retail businesses. “That will continue, but I think we will start to see a little more focus now on the client side of the business and what we can do for them,” he said.

Mike Thrower, director of banking business development at Wall Street Systems, noted that pre-crisis there was a drive of business towards perhaps four or five players in the FX market. “But over the past couple of years we’ve seen significant opportunities for regional banks to start to grab a greater share of that wallet.”

Société Générale appears to be taking full advantage of the opportunity, launching FirstAccess, a white labelling of Currenex's technology, last year to target high-frequency traders. The bank's incumbent SGFXTrade co-exists with the new system but is geared towards corporates. Stephane Malrait, global head of electronic commerce at Société Générale, said while the bank has been able to obtain market share in Europe, it is seeking to capture market share in the US and Asia.

The more forward-thinking dealers are embarking on projects to ensure there is some level of cross-asset trading available to clients, but only RBS and JP Morgan have yet extended this to cross-asset margining (see related story).

Panellists also discussed increased resourcing to post-trade processes. RBS's Hill cited third-party payments for clients that need to be sent to a number of obscure sources, or split payments, where one payment is divided into payments going to many different sources. “These are quite manually intensive processes, and we are not alone in this. So the ability to handle that business and process it as seamlessly as possible is absolutely paramount to us, and we’re working with Wall Street Systems on that.”

Also high on the agenda are preparations for the upcoming wave of regulation regarding central clearing. A working group of banks has been set up to assess how to best integrate the clearing model into foreign exchange. While it is unclear whether a single clearer will prevail, CLS has been positioning itself towards this end (see Trading Places).