Shell has announced an $11.5m equity investment in Currenex, the independent Internet-based foreign exchange portal.
The investment is the biggest in a successful $27.6 million second round of funding for Currenex, one of a clutch of multi-bank FX trading sites competing for corporate business in the $1.5 trillion daily currency markets. Shell, which transacts over $200 billion each year on the foreign exchange markets, is Currenex's first corporate investor.
Since going live in April 2000, Currenex has attracted 25 market-making banks and more than a dozen actively trading corporates and fund managers on both sides of the Atlantic. Banking participants include Germany's HypoVereinsbank, Bank of Montreal, Bear, Stearns International, Commonwealth Bank of Australia, and Credit Agricole Group. The site operates on a 'per transaction' processing fee for trades executed through the service plus a small monthly membership fee rather than on the traditional percentage of transaction value charge.
Shell says the investment provides an opportunity to extend its use of online FX services beyond its own direct treasury needs and into new, value-adding services for its growing base of B2B Internet business customers.
According to Joris Kniep, Shell, central treasury manager, "Internet-based FX is still in the relatively early stages of development in a commodity market that is ideally suited to online service provision. When backed by the appropriate technology, the Internet allows location-independent, real-time transactions for a range of currencies and values, with a variety of banks. The Web simplifies the interface between back-end systems and facilitates full integration of business processes across financial markets."
Currenex, which switched on its service in April, faces increasing competition from other independent sites such as CFOWeb, and bank-backed ventures such as FXAll and Atriax.
Kniep says Shell will continue to keep its option, but adds: "At present, Currenex is the only fully operational, independent, Internet-based online foreign currency exchange. It has customers and banks trading daily through its FXtrades Web service. At the same time, it is already developing interfaces to mid and back-office treasury systems, adding analytical tools and decision support to further its value-added position in the market."
Tim Morrison, executive vice president, Shell Internet Works, responsible for the investment in Currenex, says: "The potential, through participation in Currenex, to align our treasury and B2B marketplace needs, knowledge and experience to the continuing development of the business gives our investment in Currenex added value."