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.

First Published: e-Forex Magazine 21 / Features / October, 2005

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 - the requirements of the hedge fund community are...continued

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