Automation, “algo trading” and a tighter regulatory environment are driving change in the industry
REGIONAL WINNERS Continued...
With operations in 100 countries, including 68 emerging or frontier markets, Citi is one of the main global banks serving large multinational corporations. Its CitiFX Pulse platform enables multinationals to track cash flow and balance-sheet exposure throughout their worldwide subsidiaries and to send supporting documentation online. Citi’s in-house systems help manage the documentation required for FX transactions in many emerging markets. The bank’s size enables it to invest in the latest technology and to price and execute large transactions efficiently. Citi offers a diverse range of derivatives products from forwards to highly customized exotic FX options.
UBS has been steadily gaining market share in recent years and is now the leading FX bank in Western Europe. Greenwich Associates ranked UBS as a European foreign-exchange-service quality leader in its 2016 survey. The UBS FX prime brokerage and clearing service combines innovative technology with global reach. The bank’s straight-through processing capabilities and innovative online platform make it possible for clients to have real-time access to their positions, as well as the bank’s reports and market-risk data. UBS processed a record number of currency trades during the two minutes of the pound’s flash crash in October. The peak was 50% higher than the bank’s previous record volume, and the bank’s system handled the surge without a hitch.
CENTRAL & EASTERN EUROPE
Societe Generale has a strong presence in the four largest CEE countries: Russia (where it owns 99.4% of Rosbank), Poland, the Czech Republic and Romania. Altogether, the bank operates in 14 countries in the region and maintains a network of 3,800 branches. SG has advised numerous CEE clients on hedging long-term risk with structured cross-currency swaps. The London branch of its corporate and investment bank has a dedicated emerging markets desk, where strategists work closely with SG’s locally based economists. The bank offers customized solutions to address unusual risk management issues, including mergers and acquisitions and balance sheet hedging.
Q&A w/Societe Generale: Hedging Currency Risk
Citi has retained its leading market share in Latin America, where it provides liquidity in complicated markets. Citi has executed local derivatives in 14 Latin American currencies. In 2016 the bank introduced post-trade flow automation on its CitiFX Pulse platform in some Latin American countries and launched futures trading on the Citi Velocity platform. The bank’s presence in 23 countries in the region gives it the broadest geographic reach of any bank. Citi has developed proprietary systems to handle the documentation required by FX regulators in many countries in the region.
Singapore-based DBS Bank is a major interbank market participant in China and other key Asian markets, including South Korea, Taiwan, India and Indonesia. DBS is among the highest-rated banks in the region, and its currency trading volume has grown rapidly in recent years. In Indonesia it has helped corporates deal with a host of regulatory changes introduced by the central bank in an attempt to control volatility in the rupiah, including mandated local currency invoicing and compulsory hedging for foreign currency debt. DBS China has begun actively promoting FX derivatives to its customers. This has allowed them to capture currency movements while at the same time reducing the concentration of risk in the bank’s own portfolio. Depreciation of the renminbi has hurt many Chinese companies whose receivables are mainly denominated in the local currency, though their liabilities are in dollars or other foreign currencies.
Standard Bank of South Africa, which also operates as Stanbic, has a presence in 19 countries in sub-Saharan Africa and is the leading liquidity provider for African currencies. It is the first African bank to offer a single global FX platform with streaming prices. Business Online, Standard Bank’s electronic banking platform for Africa, provides clients with a real-time view of their cash positions across products, currencies and countries. Although the dollar remains the main currency for the global commodities trade, the renminbi is becoming increasingly important. In 2015 alone, Standard Bank converted $200 billion of dollar flows to renminbi. Its strategic partnership with Industrial and Commercial Bank of China enables it to facilitate flows between China and Africa.
National Bank of Kuwait
National Bank of Kuwait has the largest dealing room in Kuwait devoted to foreign exchange and money markets. It is equipped with state-of-the-art FX platforms and interfaces from leading global providers. For effective risk management, the bank’s front-office system is integrated with the trading platforms to ensure that all deals are promptly captured, authorized and reflected in the positions managed by the traders. The bank deals in more than 80 currencies and is a market maker in all Gulf Cooperation Council currencies. Its balance sheet size and financial strength enable NBK to execute large-ticket deals without moving the market. NBK has a global market presence, with offices in Geneva, London, New York, Paris and Singapore.