World's Best Foreign Exchange Banks 2004

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Global Finance selects the leaders in the world's biggest financial market.

EVERY THREE YEARS the Bank for International Settlements takes a "snapshot" of the foreign exchange market, with central banks around the world contributing simultaneous surveys of market activity. When the world's biggest financial market gets its class picture taken next month, it likely will be considerably larger than it was in 200!.This is because the decline in the US dollar to multi-year lows is spurring hedging activity, while the relentless spread of electronic trading is lowering the cost of access and coaxing more small traders into the currency arena, analysts say. They estimate that turnover figure could reach $1.5 trillion a day when the BIS tallies the data later this year.

Meanwhile, Global Finance has selected the leading foreign exchange banks, globally and in 70 countries and regions, in our biggest annual survey to date. We added 24 new countries this year, as well as honorable-mention awards in the United States and Western Europe and among the online trading systems that are continuing to grow rapidly.

With the input of analysts, corporate executives and technology experts, Global Finance editors chose the best foreign exchange providers. While transaction volume and market share were important criteria for selecting the winners, we also considered customer service, competitive pricing and innovative products and technology.

The big moves seen in the currency markets in recent months have heightened the value of constructive advice on risk management and strategic positioning. The potential for loss and the opportunity for gains are greater than ever for anybody who ventures into global markets or has cross-border exposure. "With the US dollar at an eight-year low on a trade-weighted basis, there has been an increase in hedging," says David Gilmorc, partner and economist at Essex, Connecticut-based Foreign Exchange Analytics. "The derivatives side of the market is already huge and growing enormously," he adds. "There are an increasing number of hedge funds that are very active in foreign exchange."

Companies need to take a disciplined approach to currency risk, says Marc Chandler, chief currency strategist at HSBC Bank USA, selected by Global Finance as the best in foreign exchange research. "We are not convinced that the US economic rebound has legs," Chandler says. As a result, the dollar could continue drifting lower, he says, particularly if the Federal Reserve is patient and waits until 2005 before cranking up rates. "Since the lower dollar boosts the economy with no risk of setting off inflation at this point, it's almost a free lunch for the US," Chandler adds.

GLOBAL WINNER

CITIGROUP

Citigroup is a market leader in foreign exchange worldwide, with a presence in 100 countries. The hank's global trading desks are major providers of liquidity to the market. The CitiFX team within the corporate and investment bank offers first-class service and competitive prices in currency spot, forward and options transactions.

Good trading opportunities in the major currencies, as a result of exchange-rate volatility, helped Citigroup maintain its strong foreign exchange trading-related revenue in 2003 at $1.8 billion, the same as in 2002.

Richard Moore, co-head of Citigroup's global rates and currencies (GRAC) group, has been appointed head of European fixed income, effective March 1, 2004. Geoffrey O. Coley, a managing director and the other co-head of GRAC, will be the sole head of the group, with global responsibility for interest rate, foreign exchange and derivatives tradIng.

Dealing in 150 currencies and offering 24-hour sales and trading service, Citigroup is the pre-eminent foreign exchange bank. Armed with the latest technology, skilled staff and the widest range of products, CitiFX offers innovative hedging strategies and investment opportunities to an impressive roster of clients. …