Does one platform really fit all?

While a number of banks prepare to offer multi-asset class trading over their single-bank platforms, there is some debate in the industry on whether clients want to rely solely on one platform to trade all products.

At a panel discussion at the ACI Congress in Montreal earlier this month, bank contributors said they are seeing interest from their clients to trade across assets via their proprietary platforms.

John Caccavale, head of North America e-commerce at Barclays Capital, said the bank has pricing engines for each product behind the same graphical user interface. He said one benefit of this is that clients can hedge exposures to other asset classes from the same place. Meanwhile, Ian O'Flaherty, global head of e-FX at Deutsche Bank, said a lot of his clients are looking to trade other asset classes such as futures, options and fixed-income from the same platform.

But not all agree that this is what clients really want from their banks. According to one platform, most clients do not want to put all their eggs in one basket. He said if an algorithmic trader, for example, wants to trade across assets, he will do so on his own rather than expecting to be able to go to a single bank platform to do so.

That may be so, but successful models already exist where multiple asset classes can be traded from a single venue. A prime example is the Chicago Mercantile Exchange, which has substantial volumes going through its FX, interest rate and equity products.

It's true that all clients may not want to trade cross assets from a bank platform, but if the option can be enabled, then why not provide it?

There's a number of ways that others have been preparing for electronic trading across assets. Early last year, equities-focused trade execution and asset management service provider Knight Capital moved into the forex space by acquiring electronic communications network HotspotFX. In October last year, Knight Capital went on to acquire ValuBond, a centralised electronic trading platform to the US bond market.

Then there's interdealer broker Icap's spot broking platform EBS, and fixed-income broking platform BrokerTec. Both platforms have APIs that enable, for example, algorithmic traders to use them as venues of choice to trade spot and fixed-income products.

The transition is already being made. Some banks have already organised e-commerce sales efforts to cut across asset class.

Saima Farooqi, Editor