Leading foreign exchange prime brokers JPMorganChase, Deutsche Bank and AIG Trading Group have announced a collaborative effort to dramatically streamline foreign exchange (FX) trades. The collaboration will improve upon and replace manual processes used by executing brokers to “give up” trades to prime brokers.
Using a new online service from Traiana® Inc., the effort allows the firms to integrate systems using a secure, shared, Internet-based service, eliminating manual processes which slow trade booking and introduce errors. Institutional clients of the three firms will benefit from increased efficiency from straight through processing (STP) for all FX prime brokerage trades and real-time access to trade information. Prime brokers and executing brokers using the service are able to lower costs, significantly reduce operational risk and increase service levels to clients.
In the Prime Brokerage model, trades are executed between an Advisor and Executing Broker. These trades are then given up to the Prime Broker from the Executing Broker for processing on behalf of the Advisor. The current state of the art is for these give up transactions to be faxed from the Executing Broker to the Prime Broker, or sent as free text messages over dealing systems. This process is inefficient and error prone, resulting in millions to tens of millions of dollars of frictional costs per prime broker per year. These costs are ultimately borne by the Advisor, the Prime Broker and the Executing Broker. Traiana removes these costs by introducing project “Harmony”.
Deutsche Bank, AIG Trading, and JPMorganChase will use the Traiana HarmonySM service to integrate their foreign exchange prime brokerage systems with each others’ FX trading systems, eliminating the need to re-key give up trades into a dealing system. Executing brokers will be able to give up their trades via electronic messaging including XML, IBM MQSeries, or SWIFT over the Internet and secure private networks. A simple web give-up and monitoring interface is also provided for smaller or lower volume brokers. Executing brokers who give up trades to the three firms can register at www.traiana.com/harmony to receive more information and begin the integration process. The three firms expect to be fully integrated in the second half of this year.
Said Andy Coyne, Director, Global Liquidity Services, Deutsche Bank: “Deutsche Bank has led the industry in electronic FX prime brokerage as we have deployed a fully automated STP solution for handling client trade information. Integrating the executing brokers into our Traiana-based prime brokerage system was the next logical step. With the combination of a robust e-prime brokerage system, this collaboration and Traiana’s capabilities, we are better positioned to handle greater volume while maintaining our high level of client service.”
”AIG Trading Group is committed to providing superior service and products to our Prime Brokerage clients. By collaborating with JPMorganChase and Deutsche Bank, we enhance our e-Prime Brokerage solution. With Traiana, AIG provides connectivity technologies that offer superior trade processing capabilities and client service functionality. Clients benefit from simplicity and efficiency,” said John Wareham, AIG Trading Group’s Executive Vice President and Global Head of Foreign Exchange and Emerging Markets.
“JPMorganChase has made a significant commitment to our FX prime brokerage business, and this strategic initiative takes it one step further. Our collaboration with Deutsche Bank and AIG Trading will improve service levels to our clients and create efficiency in our industry. Traiana’s focus on FX prime brokerage and strong technology made Traiana the right provider for this initiative.” David Puth, Global Head of Foreign Exchange & Commodities, at JPMorganChase said.
“Traiana is pleased to be selected for this industry initiative. As the leading software provider for institutional client service and trade operations, our Trading Relationship Management (TRM) solution has already integrated over 40 of the largest buy-side firms into their prime broker. Seamless integration to the executing brokers was the final piece of the puzzle,” said Gil Mandelzis, CEO, Traiana Inc. “With Traiana Harmony, the trade lifecycle will be fully automated to benefit our customers’ institutional clients.”
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