Aussie banks are increasing their commitment to electronification, spurred on by aggressive competition from non-bank market makers – particularly for spot FX business
The electronification of FX is of huge benefit to clients globally who need to deal in the Australian time zone.
According to Euromoney, Vinay Trivedi, FlexTrade’s senior vice-president, strategic initiatives, suggested Australian banks have failed to capture a market share that reflects their status as natural Australian and New Zealand dollar market makers due to relatively weak eFX offerings.
He also noted that Australian banks have only sharpened their focus on electronification in the past couple of years and that the impact has been much greater among business-to-business and business-to-consumer brokers.
Vinay Trivedi suggested non-banks’ share of the market has grown rapidly during the past two years.
Michael Go, head of FX market development, Asia-Pacific at Thomson Reuters, agreed that non-bank providers are penetrating the market with smart technology and new, client-focused business models.
Multi-bank platforms, white-labelling and outsourced infrastructure have also been on the increase as regulatory, investor and capital demands begin to impact business and compliance models,” he added.
Natallia Hunik, global head of sales at Fortex, observed that ASIC is mulling over further leverage reduction changes and the implementation of maximum leverage caps with regard to contracts-for-difference in particular.
This could lead to a shrinking of the market and may force Australian firms to expand overseas where rules are less stringent,” she added. “It is likely that Australian firms would look to Asia (and southeast Asia in particular) as possible areas for expansion.
Renminbi Adam Gazzoli, R5’s business development manager, described the AUD/RMB cross as the “next big thing” in the Australian FX market, despite data from Peter Lee Associates’ annual FX survey showing that AUD/USD accounts for 89% of FX activity amongst the country’s highest volume customers.
Australian banks are seeing more Indian rupee flows as trade and investment picks up between the two countries,” he shared. “Perhaps that is not such a surprise since Perth is closer to Calcutta than it is to Sydney or Melbourne. “However, Indian rupee still has a long way to go before it catches up with the China relationship. The Australian dollar is a good proxy for world sentiment on China.