Exclusive: SEB Puts Brakes on FX Prime Brokerage

The FX prime brokerage sector is facing some of its toughest challenges since the 2008 global recession which saw major consolidation and rethink in the sector. Forex Magnates reports that Swedish bank, SEB, is making major changes which are impacting its Foreign Exchange Prime Brokerage division, in addition, its global head of FX prime brokerage has left the organization.

SEB is reviewing its FX prime brokerage (FXPB) services as it restructures the unit, the firm is believed to have put a temporary halt on new applications, however it will continue to service its existing clients, a person close to the matter informed Forex Magnates.

SEB, a leading Scandinavian banking institute, extended its strong equities framework into the FX space in 2007, the division was headed up by Noel Singh. The firm offers a range of services to hedge funds including, execution, financing, structured products, advisory and prime brokerage services.

The move comes on the back of a number of changes affecting the wider prime brokerage market. A number of leading banks have reviewed their FX offering in relation to their traditional FX franchise as volumes and margins decrease.

Most notably, Morgan Stanley was the talk of the town after it entered the FXPB space with a price wave, undercutting several competitors. However, with price compression impacting the market, the bank is believed to have withdrawn its core FXPB service. In addition, BoAML is believed to have re-addressed its FXPB unit which is headed by Peter Klein, the bank having merged its multi-asset prime service with its FX offering, with Richard Holman recently leaving the bank.

Noel Singh joined SEB in 2010, prior to that he was VP Sales at Integral Development Corporation, according to his LinkedIn profile, Mr. Singh has been in the market for over 20 years.

Dutch bank, Rabobank, is another culprit of the recent credit squeeze, the firm serviced small and mid-tier hedge funds and has recently closed down its FXPB unit, with long-standing Peter Pleister who joined the firm in 2005, later joining Saxo Bank. SEB and Rabobank filled a crucial gap in the prime brokerage sector for entry level firms; both firms are believed to on-board clients with collateral from $500,000, a significant difference from the balance sheet requirements of tier-1 banks.

London-based LMAX has transferred its FXPB from JP Morgan to BNP Paribas, a person close to the matter informed Forex Magnates.

SEB was the sole Nordic FXPB provider. The bank is a member of Traiana’s Harmony Network and offered users connectivity to a number of ENCs and counterparties, including Currenex. In addition, the firm used to provide its pricing and execution capabilities from its Trading Station, Trading Platform .

Forex Magnates expects the FXPB sector to further consolidate and the up-and-coming Prime of Prime (PoP) sector to take heed, with a number of new PoPs being launched over the next twelve months.

Additional reporting by Ron Finberg