Bill Strachan 07-Aug-2012 10:15:00 1 min read

The loosening of the regulatory noose…

Threats of overly tight regulation have shown strong signs of subsiding, re-fuelling the appetite for Single Dealer Platform investment.

For quite some time, banks and solutions providers in the USA and Eurozone have been operating under the threat of increased regulation. After a protracted period of investigation and consultation it is emerging that the various regulators will be taking a much softer line on products such as vanilla FX than was initially feared. Rather than looking at the electronic market as a whole, regulators are focusing their attention on the riskier products and those non-pivotal in the justification for a single dealer platform. This has paved the way for a raft of new e-trading initiatives. Primarily these affect banks in the upper tiers but there is undoubtedly a ripple effect to lower tier banks. The long standing trend by banks to move their client bases onto online offerings shows no signs of slowing down. Recent surveys are also showing that this is being achieved through single dealer platforms rather than through the multi bank portals where, as a whole, the underlying volumes have dropped over recent years. Additionally there is also evidence that an increased number of banks in the lower tiers are now looking to move to an online offering in response to customer demand, more commoditised proven solutions and ultimately lower market entry costs.