Alex Wolcough
Alex Wolcough

Defining a new standard for client enablement in FX

The accuracy and speed of electronic trading in OTC markets has been one of the key aspects that continue to drive its growth and the move to have more instruments traded electronically has been supported by legislation such as Dodd-Frank and the next round of Market in Financial Instrument Directive (MiFID). However, as Alex Wolcough outlines in this article, whilst electronic trading, and the associated straight through processing to clear and settle trades, aims to remove costly operational errors, one key aspect remains as a potential Achilles Heal: Client Enablement.

First Published: e-Forex Magazine 55 / Leader / January, 2014

Before a dealer can trade with its client on an electronic platform, whether it is a Single Dealer Platform or one of the Multibank ECNs, there is a whole process of client on-boarding and client enablement that needs to be completed. Client Enablement: What is the problem? Client on-boarding focuses on the contractual relationship, ensuring that the various checks for Anti-Money Laundering and Know Your Client are completed and contracts are signed, while client enablement focuses on the day-to-day commercial relationship and how it gets reflected on the electronic trading platforms that clients use to trade with dealers. Client enablement centres on the answers to questions such as “What am I willing to trade with my client? How good a client are they, so what pricing stream should I put them on? Which funds do they trade for, so I know which accounts I need to map their trades to? Who is the sales coverage for this client? Do I want to be trading with this client right now?”These represent...continued

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