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E-FX tech spending to rise

07 June 2006  |  5717 views  |  0 keyboard

Sell side firms spend around $400 million annually on electronic FX trading technology and this will almost double by 2010, according to a study by UK research consultancy ClientKnowledge.

Daily currency trading volumes could reach more than $3,000 billion a day by 2010, says ClientKnowledge, and electronic transactions will represent a growing proportion of these trades.

Currently, around 50% of client business is conducted electronically. This is expected to rise to more than 75% by 2010.

ClientKnowledge says banks are dependent on their technology infrastructure to improve or protect net trading revenue capture and to drive down human and processing costs.

Technology spending will be maintained and increased in this space, both in absolute terms and as a proportion of costs. As a result, today's spend of around $400 million annually by the sell side on electronic FX trading will double by 2010, says ClientKnowledge.

Justyn Trenner, CEO and principal of ClientKnowledge, says: "Success for the sell side will be predicated on their effectiveness in implementing interconnected technology, trading and distribution strategies – and they will be penalised rapidly for failing to do so. Technology strategy and spend, therefore, will be at the heart of future profitability."

Trenner says the research suggests that a number of firms will benefit, particularly the marketleaders in FX e-commerce, Cognotec and Reuters.

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