AWARDS NatWest Markets wins two awards

Foreign exchange prime brokerage (PB) has experienced a turbulent time since January 15, 2015, the date that was followed by the knee-jerk reaction of raising assets-under-management (AUM) thresholds for clients and wide-scale retrenchment from the space.

There are signs the appetites of prime brokers are snapping back, but the hierarchy and priorities of both clients and dealers have changed. While traditionally, FXPB operations were built on scale and moved the biggest global institutions into pole position, clients place a lot more emphasis on flexibility today, putting the nimblest dealers at an advantage.

“This year, we have continued to focus on adapting traditional FXPB services to better meet the needs of current market participants – some good examples are our approach to credit and customer connectivity,” says Simon Manwaring, head of currencies trading at NatWest Markets.

NatWest Markets has been voted Best Bank for FX Post-Trade Services and Best Bank for FX Prime Brokerage at the 2017 FX Week Best Banks Awards.

Much of NatWest Markets’ success is built on the flexibility that clients gain from its services. It is one of the few banks that did not impose minimum AUM requirements after the Swiss National Bank event, but continued to service the full spectrum of hedge funds.

Across the industry, regulation continues to bring challenges for PB and our customer base… we think this presents significant opportunities as the role of prime brokers is becoming more important to a wider range of customers

Simon Manwaring, NatWest Markets

The bank has also put connectivity at the heart of its offering, doing away with the traditional labels of ‘customer’ and ‘broker’, and introducing the cover-all term of ‘participant’. Manwaring says the bank has made an investment to bring its customer services team directly into the business, ensuring a single front-to-back unit.

“Working with our dedicated PB legal team, we have enabled the broadest range of customer access, both through our extensive customer-to-customer network and wider market participants, including customers of another prime broker,” he says.

On top of its traditional hedge fund client base, NatWest Markets has seen an uptick in demand from intermediaries such as agency brokers, who have unique requirements when bringing together their own customers and liquidity providers.

Tailored models

“We have tailored our models to meet their specific needs, including matched principal brokers, e-platforms, non-bank LPs, ECNs [electronic communication networks], FXIs [FX intermediaries], RGU [reverse give-up] or IDB [interdealer] voice brokers, and the prime-of-primes,” Manwaring says.

The wide range of available PB models has resulted in a strong pipeline of new customers, with many of these new business relationships coming from existing referrals. And regulatory requirements, such as the introduction of uncleared margin requirements, have led new customer types to explore FXPB as well.

NatWest Markets is currently working with several asset managers to develop repo solutions, and to help them gain margin efficiencies and reduce pressure from the rising cost of capital.

“Across the industry, regulation continues to bring challenges for PB and our customer base. However, we think this also presents significant opportunities as the role of prime brokers is becoming more important to a wider range of customers,” Manwaring says.