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FORESIGHT FINANCE : FX market and technology outlook

The Foreign Exchange market is growing rapidly and will continue to do so over the reasonably foreseeable future. Currently exceeding $2 trillion daily, volumes will go above $3 trillion by 2015. Foreign Exchange remains the most study resistant market during time of recession.

FORESIGHT FINANCE, therefore, perceives a need for sell side institutions to have an integrated trading technology approach which emphasizes interoperability (that is to say the ability of different components to interact fully with other components in real time taking in to account of both analogue and digital modes of working) and transaction security focused rather than simple connectivity (linking two electronic components together)

Electronic transaction represent a growing proportion of all trades, including more than half of client volumes rising to more than 75% by 2011. The technology infrastructure needed to enable and support those trades is now fundamentally interlinked with the infrastructure needed to support and render profitable non-electronically transacted trades.

The challenges of delivering robust solutions for key components of the dealing architecture are driving a tendency to buy rather than build, even if internal builders are used to combine heterogeneous systems and components.

Banks are dependent on their technology infrastructure not only to improve or protect net trading revenue capture but also to drive down human and processing costs.

Therefore, we should expect to see technology spends maintained and increased in this space, both in absolute terms and as a proportion of costs. Today’s spending of around $500 millions annually by the sell-side on e-commerce components will rise to closer to double that by 2015. This prediction remains unchanged during time of economic slowdown as counterparties/dealers tend to focus strategically on the best time to leverage and extend their capacities.

This is our key findings further to a foreign exchange research we have conducted throughout the year 2009, interviewing decision makers, and market players within the wholesale financial institutions across different parts of the world involving major players.

FORESIGHT FINANCE is a business analysis and strategy management consulting firm focusing on the global financial service sector. Our leading research department develops original analytics, metrics insights and foresight to help business leaders - both buy side and sell side - make better decisions which improve their business’ market shares allocation worldwide through strategic research, market business intelligence, market segmentation, client targeting, business development, new product development, widening product in offerings, resource allocation and overall business strategy.
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By Emmanuel Mendy


Mercredi 31 Mars 2010

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