James Kemp Kemp Managing Director of Stentra
James Kemp Kemp Managing Director of Stentra

Technology Challenges: the next phase of FX Prime Brokerage evolution

James Kemp looks at what’s likely to shape the future evolution of FX Prime Brokerage.

While FX Prime Brokerage has been in existence for over a decade, the last two to three years have witnessed its transformation. What was a “niche product”, offered by banks to a few select clients, has now become a “must have”, with banks scram-bling to gain market share. Not surprisingly, prime brokerage has acquired great sig-nificance for investment banks: according to a recent report by CSFB, in 2004, it ac-counted for more than $25 billion or 12.5% of total fees.To date, the efforts of prime brokers have focussed on enhancing connectivity with the client base. Future evolution is likely to involve electronic provision by banks of a greater range of products (not just cash foreign exchange) and the use of automation to remove inefficiencies from operational processes (notably the “give-up” process).The power and increasing diversity of the buy-side will also provide fresh technologi-cal challenges for prime brokers -...continued

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