Rabobank Exiting FX Prime Brokerage, Cites Lack of Complete Fit with Their Business Strategy
- After a tumultuous 2013 which saw Rabobank fined by the CFTC and FCA for their involvement with the LIBOR manipulation scandal and the resignation of its CEO the Dutch bank is exiting the FXPB business.
After a tumultuous 2013 which saw Rabobank fined by the CFTC and FCA for their involvement with the LIBOR manipulation scandal, resignation of its CEO Pieter Moerland, and 2% decline in profits, Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates has learned that the Dutch bank is exiting the Foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Prime Brokerage (FXPB) business. Explaining the decision, a representative from Rabobank confirmed the news, stating to Forex Magnates, “The bank considers these specific activities to only partially align with our strategy. We will support the clients affected, through the diligent winding up of the relevant services.” The decision is similar to last year’s exit by Rabobank from the equity derivatives business, where the bank stated that the unit wasn’t meeting a core role in their overall strategy, as reason for the actions.
The decision by Rabobank to exit occurs as the unit has been in the news several times this year. In April, it was reported that Rabobank’s Head of Prime Brokerage, Peter Plester, had moved to Saxo Bank. Also in April, Rabobank and Integral parted ways, with each side no longer supporting the other’s services. Among Rabobank’s customers include LMAX and Boston Technologies.
Providing clearing and credit to financial institutions, prime brokers are an integral player in allowing firms and exchanges from around the world to trade with each other. In FX, due to tighter banking regulations requiring increased levels of minimum capital as well as increased reporting and legal expenses related to operating in the space, prime brokers have been stricter with their allocation of capital. As a result, so called Prime of Primes, have been able to grow their market share by providing credit services to smaller firms unable to access FXPB’s directly. Rabobank itself was considered a bit of a ‘tweener’ as they were a primary bank offering direct credit lines to the interbank FX market, but also serviced lower capitalized firms that Tier 1 firms like the JPMorgan and Citi’s of the world ignored. Their exit is thus an opportunity for prime of primes to gain additional clients, but creates a void of lower end primary bank offerings.
After a tumultuous 2013 which saw Rabobank fined by the CFTC and FCA for their involvement with the LIBOR manipulation scandal, resignation of its CEO Pieter Moerland, and 2% decline in profits, Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates has learned that the Dutch bank is exiting the Foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Prime Brokerage (FXPB) business. Explaining the decision, a representative from Rabobank confirmed the news, stating to Forex Magnates, “The bank considers these specific activities to only partially align with our strategy. We will support the clients affected, through the diligent winding up of the relevant services.” The decision is similar to last year’s exit by Rabobank from the equity derivatives business, where the bank stated that the unit wasn’t meeting a core role in their overall strategy, as reason for the actions.
The decision by Rabobank to exit occurs as the unit has been in the news several times this year. In April, it was reported that Rabobank’s Head of Prime Brokerage, Peter Plester, had moved to Saxo Bank. Also in April, Rabobank and Integral parted ways, with each side no longer supporting the other’s services. Among Rabobank’s customers include LMAX and Boston Technologies.
Providing clearing and credit to financial institutions, prime brokers are an integral player in allowing firms and exchanges from around the world to trade with each other. In FX, due to tighter banking regulations requiring increased levels of minimum capital as well as increased reporting and legal expenses related to operating in the space, prime brokers have been stricter with their allocation of capital. As a result, so called Prime of Primes, have been able to grow their market share by providing credit services to smaller firms unable to access FXPB’s directly. Rabobank itself was considered a bit of a ‘tweener’ as they were a primary bank offering direct credit lines to the interbank FX market, but also serviced lower capitalized firms that Tier 1 firms like the JPMorgan and Citi’s of the world ignored. Their exit is thus an opportunity for prime of primes to gain additional clients, but creates a void of lower end primary bank offerings.