Retail FX: the light at the end of the tunnel?

Last week Citi officially announced the extension of the CitiFX Pro FX margin trading platform to qualified registered trading advisers, who will use the platform to trade foreign exchange on behalf of their managed accounts. Since rolling out the programme in the US a few weeks ago, the bank has already signed a handful of locally based money managers, according to bank officials. Last week, CitiFX Pro also launched its introducing broker programme and is already processing applications.

The outlook is promising, with plans for an aggressive rollout in several countries in Asia, Europe and the Middle East. So far, CitiFX Pro has only been rolled out in the US and Hong Kong. A bank official said the volumes the platform is seeing are very promising, adding: "We expect in the first six months of the new year to be live in many, many more countries and that's really exciting."

The sentiment is echoed by Deutsche Bank, which launched its managed accounts programme on its retail platform, dbfx, in autumn 2007. The bank says managed accounts now represent 30% of revenues on dbfx and almost 20% of the platform's client base. The remainder is made up of self-directed accounts, while a percentage comes in through introducing brokers.

A bank official said the introducing broker business is being grown slowly intentionally, to ensure that regulated and reputable entities are found. In this respect, the bank has had much success in the Middle East, where 20% of its clients come in through introducing brokers. In other regions, introducing brokers make up less than 5%. Since launching in May 2006, dbfx has been rolled out in 81 countries and has conducted due diligence on the legal environment for running its managed accounts programme in 56 of those countries.

The managed account strategy is certainly a logical way to expand a bank's presence into the retail trading community. Indeed, with the significant layoffs being seen across asset classes at banks and other institutions, demand for this service is likely to grow.

Saima Farooqi, Editor

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