FOREIGN EXCHANGE - IN A CLASS OF ITS OWN

• FX volumes have grown by over 71% since 2004, eclipsing equities and other markets as investors turn to FX as a discrete asset class

• Retail FX is generating healthy revenues estimated to be in the region of $1bn. The sell-side’s opportunity to capture this flow is too good to miss. However, it must be prepared both technically and operationally to meet the challenges ahead

• The rise of aggregators and portals is subjecting the sell-side to greater transparency and driving a need to improve its management of liquidity. However, the sell-side’s systems are creaking under the strain and it needs to re-invest in technology to plug the gaps in its capability

• Both the buy-side and the sell-side must seriously consider making more use of algorithms and investing in the underlying technology required to make them function effectively

• With huge volumes surging through the FX market, there is an opportunity for the liquidity provider to capture flow and additional revenue. Technology holds many of the answers and can play a valuable role in helping the sell-side banks to retain their historically dominant position in the FX market.