Tradition’s Summer Push Into Latin American Currencies

NEWS

NEW YORK--Voice-brokerage Tradition is pushing into Latin America over the next month as it consolidates its presence in emerging markets FX products. The move marks the next phase of restructuring in the New York office, which has spent the first half of the year chasing business in Asian currencies.

Tradition’s ideal goal is to offer a range of products including spot, forwards, non-deliverable forwards and interest-rate swaps on all its emerging-markets currencies, says Peter Wadkins, senior vice-president of global emerging markets and director of foreign exchange at Tradition in New York. Currency options are carried out by sister company Tradition Financial Services (TFS), soon to merge with Garban-Intercapital.

"Our drive in these markets is to establish ourselves among the more active brokers in Latin America, focusing mainly on the Argentine peso and Brazilian real," says Wadkins. "It’s going to be very hard because it’s a very competitive market. There are seven brokers at the moment.

"Part of the strategy to do this is to offer more far-reaching solutions to traders’ problems and therefore make them more willing to show their interest to us."

Since joining Tradition in February from the emerging markets desk at Tullett and Tokyo in New York, Wadkins has reorganised the desks, so brokers in different products and currencies sit alongside one another. Traders can thus get prices on multiple products and currencies easier, argues Wadkins, as there can be a single point of contact.

"People come to you first and don’t think about going to somebody else. For example, there are some clients who were just trading spot with us, who are now trading Asian non-deliverable forwards" explains Wadkins. "It’s very difficult for other brokerage companies to restructure along similar lines to us. Most of them have an entrenched management style."

Risk aversion to emerging markets in general among global financial institutions after the Asian and Russian crises in 1998 could work to Tradition’s advantage, believes Wadkins. As major banks have a limited amount of risk they can apply to emerging-markets currency products, they are reluctant to push them to clients. But the demand is there and Tradition intends to tap it, he says.

"You get more natural demand from some of the smaller banks, including international banks in New York which do not have an emerging-markets presence. They have interesting manufacturer customer bases with production capabilities globally," says Wadkins.

"They’ve got exposure in these countries, but the smaller banks have probably not developed these products yet."

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