Magazine article Global Finance

Best Behaviors

Magazine article Global Finance

Best Behaviors

Article excerpt

The foreign exchange (FX) market is becoming more competitive. Machines are replacing humans at a rapidly growing rate. The top five FX banks are refining their client lists and avoiding markets offering low return on equity, thus giving up market share. The top five FX banks still account for 44% of the global market, according to the 2017 survey of FX users worldwide by Greenwich Associates; but that's down from 53% in 2013. That has opened opportunities for regional banks with local expertise to step in as valuable partners.

"The bottom line is that the FX market is increasingly competitive," says Kevin McPartland, head of market structure and technology research at Greenwich Associates, "and competition is always good for the market."

Maybe. Hypercompetitive markets can drive an easing of ethical commitment. That's not happening in FX. The world's top FX banks have checked and rechecked their operations carefully to make sure they are complying with the spirit of the industry's new global code of conduct.

Central banks and market participants from 16 countries and territories around the world collaborated in developing the FX Global Code, a set of global principles "to promote a robust, fair, liquid, open and appropriately transparent market." Participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the market. They must be aware of, and comply with, the laws, rules and regulations applicable to them and the FX market for each jurisdiction in which they do business. The code has no enforcement mechanism, however.

Technology has helped maintain a balance. FX investors continue to increase their trading on multidealer platforms, which create a more level playing field for liquidity providers. "The FX market is now one of the least concentrated over-the-counter markets in the world," McPartland says. "Financial end users, regulators and emerging dealers all benefit from its growing diversity."

In this, our 18th annual World's Best Foreign Exchange Providers Awards, we selected winners in 104 countries and seven global regions. For the first time, we name the Best Banks for FX Trading Technology. We feature four global awards, GLOBAL WINNERS

BEST GLOBAL FOREIGN EXCHANGE BANK

Citi

Citi trades more than 140 currencies from FX desks in 83 countries and has the broadest range of clients of any FX bank. Citi is one of the main global banks serving large multinational corporations. The CitiFX Pulse platform enables corporations to track cash flow and balance-sheet exposure throughout their worldwide subsidiaries. It includes pretrade market information, including news, research and risk-management tools. Citi's in-house systems help manage the documentation required for FX transactions in many emerging markets. The CitiFX Pulse platform provides local expertise that extends through the post-trade settlement process.

BEST FX PROVIDER FOR CORPORATES

Société Génerale

Societe cenéraie's corporate and investment banking group (SG CIB) has created a cross-asset platform, One Corp, which lever ages its capabilities to provide practical solutions that improve the management of FX and commodity risks for corporations. SG CIB has developed market-leading, structured FX solutions, using its Cash FX, currency derivatives and index expertise. The One Corp platform analyzes and designs corporate solutions benchmarked against key competitors.

BEST FX PROVIDER FOR EMERGING MARKETS CURRENCIES

Standard Chartered Bank

Standard Chartered is a leader in emerging market, illiquid and restricted currencies. The bank actively trades more than 100 currencies and has FX experts positioned in 39 countries. Standard Chartered leads in the introduction of onshore and offshore FX option products in Asia, Africa and the Middle East. It is also active in the emerging markets of Latin America and Eastern Europe. Standard Chartered is a leading provider of financial risk-management tools, including products to effectively manage currency exposure. …

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