Two UK Forex Executives Awarded CBE For Achievements In Financial Industry

Two prominent figures in the foreign exchange industry have become recipients of the Commander of the Order of the British Empire (CBE) award this year. Following by several months the award given to Derek Tullett, president of Tullett & Tokyo Forex International, in January, Philip Lynch, chief executive of the Exchange Clearing House (Echo), is the most recent addition to the list of those recognized for their accomplishments in the financial industry.

Lynch's award comes at the recommendation of the Secretary of State for Foreign and Commonwealth Affairs in recognition of "the outstanding services which [he has] rendered over many years to British interests", officials say.

Lynch was appointed chief executive at Echo, the first global foreign exchange clearing and settlement service, in June last year. Prior to that, he was managing director at Lehman Brothers, responsible for all futures and commodities execution and clearing outside the US. In 1985, Lynch was elected as director of the International Petroleum Exchange (IPE) and was appointed chairman from 1990 to 1995. During those 10 years, the volume of trade on the IPE grew from two million to almost 15 million contracts a year, officials say.

One of Echo's latest achievements has been to expand the number of Japanese bank users, says Lynch. Dai-Ichi Kangyo Bank joined Echo earlier this year as a shareholder, user and nostro agent, while the Industrial Bank of Japan confirmed its intent to use Echo to help reduce settlement risk, making it the second Japanese bank and the 30th bank to have confirmed such intent (FXW, February 3 & March 17).

After more than five years of work, Echo went live almost two years ago, creating the first global FX clearing and settlement service (FXW, August 21, 1995). Earlier this year, Echo received regulatory approval and now operates a payment-versus-payment (PVP) approach within the European time zone in sterling and the Swiss franc (FXW, January 13).

Lynch says Echo plans to introduce deposit netting and OTC FX options and extend the maximum maturity date of its OTC FX currency netting from two years to five years. Echo also plans to settle the Austrian schilling by the second quarter of this year, he adds.

A well-known figure in industry circles, Lynch has long been actively involved in the regulatory affairs of the City. Between 1984 and 1986, he was chairman of the London Chapter of the Futures Industry Association (FIA). He was also a member of the Association of Futures Brokers and Dealers (AFBD) from 1987 to 1989, when he became director of the Securities & Futures Authority (SFA), a post he held until joining Echo last year. During his tenure at the SFA, Lynch served as chairman of its Business Conduct Committee and vice chairman of the SFA Enforcement Committee.

Richard Reinert, chairman of the IPE, says: "We are very pleased to hear that Phil's important work for the IPE and the City of London has been officially recognized. The decoration is well deserved and acknowledges his valuable contribution over many years."

Meanwhile Tullett, who was named in the New Years Honours List to receive the CBE award, is the first money broker to receive such an honour (FXW, January 13). His award comes at a time when the rise of electronic brokerage is threatening the existence of the traditional FX broker. But Tullett believes the voice broking industry will overcome these challenges, as its impact on the market gradually levels out.

The broker's intermediary role will not change, says Tullett. Electronic broking services cannot replace the communications and information a broker can provide when the markets are very volatile, he says, so brokers can counteract some of the marketshare advances made by these services by providing this type of added value. Foreign exchange is an important part of Tullett & Tokyo's organization, but he adds that it coincides with other significant products that have not been impacted by the electronic medium.

Tullett & Tokyo is continuing to improve on its core businesses, building the group's world-wide product base in derivatives, emerging markets and securities, he adds. One of the principal regions where Tullett & Tokyo has expanded is the Asian region. About two years ago, Tullett & Tokyo was granted a licence by China to open a representative office in Shanghai and became the first money broker to establish a presence in the country. Tullett says the company is currently awaiting permission to turn the representative office into a full branch. More recently, Tullett & Tokyo entered into a joint venture with a brokerage in India (FXW, January 27).

Tullett says the company has also undertaken some technological initiatives over the past year. Tullett & Tokyo began providing foreign exchange spot prices and market commentary in a "toe-dipping exercise", to test the potential for market data provision over the Internet (FXW, April 22). The London-based branch is installing a pre-calculative system, following its success in New York, which, in conjunction with future enhancements, will allow Tullett & Tokyo to reduce back office costs, eliminate human error and enhance risk management (FXW, October 28).

Last year, Tullett & Tokyo was voted the best broker in Tokyo in the FX Week/Syntegra Best Banks in FX Awards for 1996 (FXW, October 21). The previous year, the shop cleaned up the best broker awards in New York, London and Tokyo (FXW, April 24, 1995).

Tullett attributes the company's success to his "talented management team" who have the expertise to remain ahead of market demands and trends. "Our company prides itself on its ability to foresee the opportunities arising within the marketplace and assess where the market is heading," he adds.

Reflecting on his 40-year career, Tullett says the broking market will always have the ability to metamorphose itself. Over the years, the broking industry has expanded from its original inroads in foreign exchange and cash markets to a vast array of products across the entire spectrum of financial services, he says. "The greatest aspect about the broking industry is that it has undergone a classic, but totally natural, evolution over the years," he adds.

The CBE, which officials say is the first such award given to a money broker, is awarded to business leaders who have excelled in their fields throughout their careers. The award will be presented to Tullett by Her Majesty Queen Elizabeth II at Buckingham Palace in London at a date yet to be announced.

Tullett's career began in 1953 with his appointment as a junior dealer at Australia & New Zealand Bank (ANZ) in London. In 1956, Tullett joined the broking company Savage & Heath (now known as Harlow Butler Ueda in London). Within five years, he became a partner and three years later, he was appointed managing director.

Tullett founded Tullett & Riley in London in 1971 with just 15 employees, but now the company has over 3,000 staff world-wide and branches in North America, Europe, Asia-Pacific and Australia. In 1983, Japan's largest money broker, the Tokyo Forex Company, acquired a significant shareholding in Tullett & Riley and the company became Tullett & Tokyo Forex International.

Tullett says one of Tullett & Tokyo's most important and innovative achievements came when, in 1972, the company became the first international money broker to open a New York-based office in its own name. At that time, he adds, there were around 12 brokerages operating in London and competition was fierce.

"Then, brokerages were licensed by broking associations and new applicants needed around eight sponsors to set up shop," he says. "Now, brokerages are licensed by the Bank of England--although the number of shops in the marketplace remains similar--competition is still tough."

Tullett & Tokyo's chief executive officer John Nixon says: "As an organization, we are extremely pleased and proud to have Derek awarded this honour. We believe that it is not only a positive statement for Derek, but for our company, the people who work for us and all of those who have worked in the money broking industry over the years."

"Derek, along with many others, has worked extremely hard on behalf of the money broking industry and we certainly feel positive that one of the industry leaders has been recognized," adds Nixon.

During his tenure, Tullett has been involved with a number of outside organizations. He was chairman of the Foreign Exchange Brokers' Association 1983-1985, and appointed treasurer of the Wholesale Markets Brokers' Association in 1995.

He is also currently a director of the Polka Theatre for Children where his company has sponsored the Christmas production for 11 years. He is also a trustee of the Airborne Forces Charities, which assist former and current service persons and the Ironbridge Gorge Museum Development Trust. He is also director of the recently formed sports management company, Ludorum Management, which is chaired by British swimmer Duncan Goodhew.