E-TRADING -- UBS reigns supreme for e-commerce

The Swiss bank, which now transacts more than 70% of its total FX volumes electronically, sees e-commerce as an integral part of its forex service. "Electronic distribution is woven into the fabric of our business -- it’s centric to our distribution strategy," said Fabian Shey, UBS’s joint global head of FX distribution and services in London. The ratio of trades the bank transacts electronically is expected to continue rising steadily over next few quarters, he added.

UBS was voted top in e-trading by both banks and investors. "We have placed a great deal of emphasis on serving the banking client segment," said Shey. "Electronic price discovery and execution offers a great deal of value for banks that are servicing their own end-clients because of the efficiency it provides -- tight spreads, speedy execution and straight through processing. So a large number of banks have come to rely on UBS’s electronic services to help them grow their business."

The introduction of executable streaming prices to its proprietary forex platform, FX Trader, in June this year resulted in a marked increase in hedge fund business, said Shey. "Not only did new start-up hedge funds immediately start dealing with UBS over electronic channels, but the larger more established funds -- who initially, in 2001-2002, had been reluctant to adopt electronic trading -- have now begun to migrate with a much greater level of interest."

The auto-quoting limit is another important factor in encouraging bigger clients to migrate larger deals to e-channels. UBS has steadily been raising the size limit on its auto-quoted trades, which is currently at €75 million, or equivalent, in the major currency pairs.

For corporate clients, Deutsche proved the platform of choice this year, a result the bank puts largely down to the flexibility of its e-trading offerings. "We are committed to providing liquidity to our corporate clients through whatever electronic channels best suit their business needs," said Christopher Berry, head of FX global liquidity services at Deutsche Bank in London. The basis of these channels is: "reliability -- both technologically and in terms of spreads; speed of pricing, security and efficiency of execution; and a set of post-trade services that enables the corporate to achieve a high degree of straight-through processing," he said.