Justyn Trenner CEO & Principal, ClientKnowledge
Justyn Trenner CEO & Principal, ClientKnowledge

Revealing a more profitable FX business

Over the last five years, many FX banks have discovered that they can make more money with less risk by outsourcing market-making. Justyn Trenner explains why we are now ready for a new stage in this evolving process.

First Published: e-Forex Magazine 29 / Viewpoint / October, 2007

Over the last five years, many FX banks have discovered that they can make more money with less risk by outsourcing market-making. We are now ready for a new stage in this evolving process. Whilst there are benefits of the typical “wide label” approach, it leaves a number of areas of performance leakage. The first is that it leaves no obvious opportunity for netting, those occasions when a client to the left could be offset by a client to the right; the second is that this approach often fails to make use of the unique source of data that the client bank is watching, the data contained in client flows against which the bank could be reasonably taking risk; and, finally, a partial implementation of a white labelling strategy may leave too many personnel and too much risk of broken trade processes compared to an optimal solution. Furthermore, the growth in the number of venues and the willingness of banks further up the food chain to take advantage of those venues (where those venues should be...continued

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