Swissquote banks on swaps and forwards for institutional clients

Institutional FX liquidity manager Maxime Mordelet  explains Swissquote’s plans to broaden its product range, with a focus on becoming more competitive in FX swaps and forwards

Spurred on by more than two decades at the forefront of the retail FX electronic trading industry and, more recently, in the institutional realm, Swissquote is determined to conquer the FX swaps and forwards space in a bid to broaden its product range. With daily trading volumes averaging $6 billion, the Swiss bank is keen to leverage its retail success by expanding its product offering, and particularly instruments targeted at its institutional clients.

“We are very competitive in e-FX spot,” explains Maxime Mordelet, institutional FX liquidity manager at Swissquote. “We have proven our concept with retail clients, and now we want to focus on our institutional franchise. We feel it is time to increase the products we offer by becoming very competitive in swaps and forwards.”

Investing to target emerging markets

Several years ago, Swissquote began investing heavily in its technology stack to boost the trading capacity it can offer to its institutional clients. Conscious that the electronic FX spot landscape is already extremely crowded, the bank felt it would be best placed to provide institutional clients with greater added value in the less trodden areas of the FX industry. For this reason Swissquote chose to focus on FX swaps and forwards, targeting mid-sized corporates and regional banks in emerging markets.

While Swissquote already has an important local presence in a number of emerging markets, the bank is keen to leverage its client network in eastern Europe, the Middle East and Turkey.

“Obviously we want to cover our national market,” says Mordelet, “but having to compete with two of the most competitive banks in the world –  UBS and Credit Suisse – we feel we can make a bigger difference in emerging markets. We already have a very important client base in those regions and great local language salespeople to service them from our various offices, including the one in Dubai. These regions are already important for us.

“We’re really competitive in Group of 10 currencies but also in emerging markets, and that’s where we can really make a difference for smaller corporates and regional banks. We can provide these clients with dedicated liquidity and a dedicated FX emerging markets offering to help them execute their foreign exchange in a more professional manner.”

Streaming liquidity access

To fulfil its trading and hedging needs Swissquote will provide its institutional clients with access to 24-hour streaming liquidity at the major multilateral trading facilities (MTFs) in the market such as FXall, 360T and Integral. But, for clients wishing to trade on specific electronic communication networks (ECNs), the Swiss bank can cross-connect to any trading environment through the Lucera technology. 

And, in addition to providing its institutional clients with access to a swath of MTFs and ECNs, Swissquote also offers them the ability to take advantage of three- and four-way give-up setups the bank has negotiated with prime brokers such as Deutsche Bank and UBS.

For mid-sized bank clients, a white-
labelling of Swissquote’s trading platform is an option, should they wish to extend FX trading to their clients, backed by more than two dozen top bank and non-bank liquidity providers as well as Swissquote’s internalised global FX book. 

Unlike many of its competitors in the retail FX trading space, Swissquote holds a banking licence and is regulated by the Swiss Financial Market Supervisory Authority. This means it can extend credit lines to its clients, which is a feature the bank expects would particularly interest to corporates in need of short-term liquidity.

In addition to credit lines, corporates can also take advantage of Swissquote’s range of products – FX, treasuries and fixed income – to assist them in their day-to-day operations.

And, for corporates with recurring invoices in various parts of the world, the bank can facilitate the delivery of physical FX via the network of correspondent banks Swissquote has built over the years.  

“We know that corporate clients have real FX needs so, unlike many of our competitors, we’ve chosen to partner with counterparties across the world and are able to physically deliver most currencies through our correspondent banks,” concludes Mordelet. 

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