Banks are ramping up their FX technology capabilities by offering ever faster, more efficient, and user-friendly applications. Citi’s Citi Velocitysm FX trading 2.0 is one such system.
By Geralyn Frances
In the highly competitive world of foreign currency trading, global FX banks are on the attack when it comes to technology.
Here banks are offering not only fully electronic transaction capability but also faster execution and sharper trading tools for professional dealers. These recently enhanced trading platforms and state-of- the-art features are aimed at giving their clients information faster, cleaner and more efficiently.
One would think that in these days of bank retrenchment, capital spend would suffer. But not so with foreign exchange trading. To be sure, while banks and many other asset classes are feeling the squeeze due to a changing regulatory environment and new capital requirements, FX is positioned to continue to grow.
Citi, like many other global banks, is jumping to the fore with improvement to its entrant to the FX technology arms race: Citi VelocitySM FX Trading 2.0.
BETTER PACKAGING
With competing trading platforms often displayed side by side on a computer screen, leading FX banks are betting that an improved “look and feel” will give them an edge in the lucrative FX market.
Therefore, with smarter use of their client’s limited screen space, a bank can display not only pricing and spreads but also charts, news and strategies to sup- port currency trading. The look today is much cleaner and full trade execution is just one click away.
“It is all a matter of real estate” on a trader’s many screens, noted Andrew Tokar, Director, eSolutions, Corporate Foreign Exchange at Citi, who recently introduced version 2 of Citi Velocity. With the potential of missing a price change, they don’t have the luxury of wasting space with under-performing applications.
Mr. Tokar explains that the Citi Velocity trading application exemplifies the “fast, elegant, efficient” features professional traders in the foreign currency markets are looking for in an FX platform.
“The goal is to own the desktop or- ganically,” he said. And with Citi’s new ver- sion comes many standout features that he hopes will continue to attract currency traders and their transactions.
A LOOK AT THE COMPETITION
Competition has certainly intensified since the start of the financial crisis, with many of the lower-ranked banks bulking up staff and using new trading technolo- gies to try to snag more business.”
One Citi goal: cut down on screen real estate.
Citi is currently ranked fourth out of the top 10 global currency dealers, hold- ing steady its position from 2010, ac- cording to Euromoney magazine’s 2011
FX Survey results. The top 10 provider banks held about 77 percent of the to- tal FX volume ($177.6 trillion market) in 2011. And with many of these banks set to rollout their answer to the technology challenge, staying on top requires banks to continue to innovate and build on their current platforms. As Mr. Tokar describes, “It is like getting a new computer…it becomes obsolete the day you install it.”
Growing your liquidity pool is another key ingredient for staying competitive. As indicated by a 2010 Euromoney FX survey, for those that have the largest liquidity pools, “rich rewards await.” Dominance in providing liquidity in the world mar- ket leads to revenue growth, via speedier transactions and reduced spreads, and ultimately to more profit.
The “client to client” matching feature of Citi Velocity helps to accomplishment that, by improving liquidity and increasIng volumes via leveraging Citi’s world- wide client base.
WHAT TRADERS WANT
Most professional traders will have three to four counterparties that they deal
with, each one with its own single-dealer platform. This is a typical set-up for larger treasury operations where there exist significant risks due to the underlying FX cash flows generated by the business.
Some treasury groups have a dedicated trading floor and staff to handle their FX risk, as well as interest-rate and commodities exposures. In-house trading often allows these same traders to deal for the company’s own account, using their expertise to make some profit via speculative trading.
As the treasury function tends to be conservative, proprietary trading demands, minimally strict adherence to trading limits and policy rules as deter- mined by the treasurer and approved by the CEO and the board of directors. And ample trading lines of credit in order to deal and hold market positions.
Another option is to employ an inde- pendent trading platform solution such as FXall. These platforms help facilitate trading and streamline the process with- out going to a specific broker. Many offer electronic trading and straight through
processing. But you do not get that one-to-one with your bank and some of the price flexibility of trading with multiple provid ers simultaneously. However,it’s good for corporate treasuries with lower exposure levels; it is also an alternate solution to be considered for managing FX risk and trading needs of the operation.
Dynamic, compact, and innovative; three words that sum up what Citi wants customers to see in
Citi Velocity 2.0.
According to Citi, global corporate treasuries with greater than 200 trades per month can be considered medium- to high-trading-volume operations. Where your treasury operation sits will partially determine how many platforms and counterparties are needed optimally for your trading needs.
BEST FOOT FORWARD
Dynamic, compact, and innovative are the three words that sum up what Citi wants customers to find in the newest version of Citi Velocity 2.0 FX Trading application.
Dynamic to meet the fast paced needs of currency traders and supported by real-time, financial market reporting and analysis. Fed by 500-plus traders in 72 countries,news feeds include proprietary information only available to Citi’s clients.
Compact with the ability to use a magnetized function to group tiles of information, then size and customize while displayed on a trader’s screen.
Innovative with tile-cloning abilities and sharp screen displays that can be rearranged to meet the profile needs of their clients.
Also impressive is the new FX platform’s increased speed of processing, desktop efficiency and real-time information, all enhanced and provided at a lower cost to clients. With these improvements as well as deeper liquidity, Citi hopes to solidify its place as a top global FX provider.
Corporations are continually look ing for ways to exploit the vast FX mar ket for hedging risk and managing large currency flows, all with speedy, one-click execution. And Citi Velocity 2.0 FX Trad ing, which has all of the above along with real-time news updates and analysis, just may be the answer.