With banks struggling with weak capital markets the past few months, they are trying all possible ways to find new sources of revenue. That would explain the mad rush among the world’s biggest banks to come up with better foreign exchange technologies to take each other on.  As the foreign exchange market continues to swell from its already enormous size of nearly $4 trillion each day, the negligible margins and cut-throat competition do not quite deter the biggest players from vying for a larger share. Deutsche Bank (NYSE:DB) boasts of being the leader, with Barclays (NYSE:BCS), UBS (NYSE:UBS) and Citigroup (NYSE:C) close on its heels.
The biggest foreign exchange players have been making significant and continuous changes to their forex trading platforms in recent months. While the speed and reliability of the FX systems remain the core of most of their upgrades, the banks are spending millions to efficiently integrate more information into their trading platforms so that they can benefit from the trends in stocks, bonds and commodities. The focus is on building more robust platforms that are capable of handling complex algorithmic trades.
Citigroup seems to be working the hardest on revamping its forex systems as it looks to role out a completely reworked version of its recently launched Velocity trading system in the coming months. In what may not completely be a naming coincidence, UBS seeks to take on Morgan Stanley’s Matrix trading system with its soon-to-be-launched Neo system. The leader, Deutsche Bank, is also looking to add more to its Autobahn offering to foreign exchange clients in the near future.Notes:
- Banks Roll Out New FX Technology As Arms Race Heats Up, The Wall Street Journal, Feb 20 2012 [↩]