Straits Financial has signed Spotex to provide FX prime-of-prime brokerage services, whilst enabling access to Spotex’s technology systems and ECN liquidity, which is facilitated by other banks and PoP service providers.
Straits joins as a Spotex PoP at a time when the Asia-Pacific-focused broker is seeking to expand its presence in the institutional FX market segment with the introduction of its liquidity pool offering that connects investors via a single venue. This collaboration also enables its client brokers to deploy Spotex’s modular technology solutions.
“We are excited to offer clients world-class credit intermediation and FX liquidity provided by Straits Financial, an acknowledged leader in the Asia-Pacific region. We expect our joint offering to be of great interest to fund managers and retail FX brokers, especially as we continue to roll out technology innovations in the months ahead,” said Spotex CEO John Miesner.
For Spotex, the agreement comes amid other initiatives to broaden participation on its network. It allows its clients to access a new source of much-needed liquidity in the FX space. As such, the combined offering helps reduce costs for buy-side firms to connect and trade FX markets by combining trading, technology, and credit services into one product.
Non-bank providers have become more influential
Straits’s FXPB product is intended for a client segment that includes banks, hedge funds, and other buy-side institutions, which are experiencing challenges accessing the wholesale foreign exchange price matching community via a prime brokerage model.
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The increase in banking regulation, which mandates increased minimum levels of capital and increases in reporting expenses, has resulted in a lot of banks leaving the prime broking space. The exit of legacy players in the prime brokerage space has indeed allowed new offerings to rapidly gain customers and fill the void.
Brokers, asset managers, among other clients, will gain access to the cleared FX liquidity, with Straits offering credit intermediation and Spotex providing the technology for connectivity. They will also benefit from Spotex technology to gain access to new functionality, including multicurrency PAMM, MAM, IB management, and trade copier/social trading.
“This includes Straits Financial’s proprietary institutional liquidity accessed via a dedicated Spotex Broker Liquidity Hub and from Spotex’s institutional ECN,” the two companies said in a statement.
Commenting on the news, Raymond Mok, Global Head of FX at Straits Financial, said: “We are pleased to provide credit intermediation and liquidity to a new set of FX brokers and fund managers through our prime-of-prime brokerage agreement with Spotex. We look forward to working with Spotex to provide credit intermediation, technology solutions and liquidity to clients across the Asia Pacific region.”