Nicholas Pratt
Nicholas Pratt

Solving the Post Trade puzzle: helping retail FX providers achieve increased operational efficiencies

The retail FX business has always been a market that generated a fair amount of wariness among banks. Generally speaking no bank turns down a customer but retail customers are not always profitable prospects. This lack of profit does not result from a poor risk and reward equation or the too great a threat of default. Instead it is the result of poor operational economics and the cost of processing so many different customers for so little value. In this article Nicholas Pratt examines how new post trade FX processing solutions can help reduce some of the draw backs associated with delivering retail FX services and also assist providers to take advantage of new business opportunities.

First Published: e-Forex Magazine 42 / Retail e-FX Provider / January, 2011

The operational constraints are coming from the banks that have to process all of the small trades performed by their retail FX customers. They do not have the capacity in their downstream systems to support such high transaction volumes.”says Jill Sigelbaum, executive vice president, global sales and alliance at Traiana, a US-based provider of post-trade processing services. “Liquidity providing banks in the FX market are concerned that processing many very small notional tickets could slow down the processing of a large ticket in their risk book. For the prime brokers, they just want to keep these retail trades out of their downstream systems because the time spent processing all of these small notional tickets could be spent processing the large value trades of more profitable, institutional clients.” she says. Demand for more efficient processing Sigelbaum says that Traiana has become an integral part of the retail FX market due to the fact that its products help to keep down the...continued

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