International expansion into regions with a highly developed institutional FX industry appears to be on the agenda for pre-trade risk and post-trade processing solution company Traiana, which today announced the opening of its new office in Singapore.
A Hive of Institutional FX Activity
With the opening of Traiana’s new operations, the company now has three facilities in the Asia-Pacific region, the other two being in Hong Kong and Tokyo, however, Singapore is home to a significant proportion of the world’s institutional FX trading activity, with its robust banking and financial markets structure having been deemed the largest FX center in Asia this September, according to a survey conducted by the Singapore Foreign Exchange Market Committee (SFEMC) which showed that the average daily foreign exchange (FX) turnover volume in Singapore grew 44% to US$383 billion in April 2013, compared with US$266 billion in April 2010.
Global turnover growth in the same period was 35%.
Andy Coyne, Chief Executive of Traiana made a corporate statement today on the opening of the Singapore operations: “Opening an office in Singapore is very exciting for us as it underlines our commitment to the region.”
We will be better able to support our growing client base of global and local financial institutions by providing best in class client services and capitalizing on the new opportunities for growth that we see in the region,” concluded Mr. Coyne.
Michael Verkuijl, Global Head of Sales at Traiana further added, “Asia-Pacific is a strategically important growth area for Traiana’s cross asset class product offering.”
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“The regulatory developments facing our industry provide an opportunity for Traiana to offer our global expertise to support our existing customers and prospects in the region and help them comply with regulatory requirements,” is Mr. Verkuijl’s commercial perspective.
In July this year, Jaqueline Liau, FX Prime & Global Head of Product and Service at HSBC addressed industry executives during a panel discussion at which Forex Magnates was present, during which the pre and post-trade regulatory considerations were discussed not only for the US and Europe with the Dodd-Frank Act and EMIR, but also the Far East, with Singapore and Hong Kong’s regimes both paving a way forward to emulate the regulatory forms which were initiated by North America’s regulatory authorities.
Ms. Liau explained to the panel at the time that: “When it comes to FX products we still have to work out realistically how to get a clearing system for FX options and when it comes to NDFs we need to find out when we will need clearing mandates for clearing NDFs.”
This may be 2014 in the US and a bit later in Europe. Hong Kong and Singapore have put it back, I expect it to be probably effective in those regions at the end of 2014,” she explained.
With much of the FX trading activity in Singapore being generated by trading desks within large banks and financial institutions, an important factor which had come to Ms. Liau’s attention during the earlier stages of this year is whether banks should continue to invest in Single Dealer Platforms (SDPs) or begin to switch to Multi Dealer Platforms (MDP). In her opinion, the answer would be, “to go with a bit of both.”
“A lot of banks have spent a vast amounts of time and energy on MDP but they cling on to SDP as a way to link into their clients. The SDP platforms will have to evolve, including smart order routers so that they can send the order into a Swap Execution Facilities (SEFs) or other SDPs, and they should offer algorithmic trading so that traders can access multiple SEFs,” Ms. Liau elaborated.
“These are common in equity and futures, but not in FX. Many banks are looking to do this with SDPs at the moment. Also SDPs are going to start to learn how to do post trade reporting, research, and risk analytics. This way, it becomes more than just a principle to principle platform, and is more than just a means of processing peer to peer transactions,” Ms. Liau concluded.
Traiana’s CMO Nick Solinger responded by stating that, “From a compliance perspective, the key risk management in the FX market operates in consistency. The Request for Quote (RFQ) platforms already operate like this. MDPs already operate on central order book, with transparency. Real time trade reporting is a new challenge, as is bilateral limit reporting, as well as screening against FCM limits”.