FXPB: a growing divide

Speaking at a panel discussion on how the growth of prime brokerage is shaping foreign exchange, delegates agreed that a division is emerging between FXPB providers.

Deborah Thompson, head of prime solutions for Europe at Deutsche Bank, said FXPBs are splitting into those purely in pursuit of the high-frequency trading community, and full-service provision of the prime brokerage product. She added the latter group will probably also become cross-product providers as well as catering to high-frequency clients.

Andy Coyne, global head of FXPB at Citigroup, said clients are more inclined to choose their relationship bank for FXPB services to maximise the value proposition. As such, big banks are at an advantage, although others will be able to create a space.

The barriers to becoming a full-service FXPB are higher than they were, added Devin Graham, global head of FX prime brokerage at UBS. "You have more ECNs [electronic communications networks] and each one has its own requirements; they have different credit processing and interfacing etc," he said. "It is now more complicated to support a wholesale prime brokerage platform than it was three to five years ago."

However, to stay out of the game would be a disadvantage, as it offers a way to get to know the client's operations in greater detail, Graham added.