Awards: Standard Chartered

The FX prime brokerage space is buzzing. During the last 12 months new entrants have appeared, and at the same time, several banks have come up with innovative and flexible solutions to cater for an increasingly diverse client base.

Standard Chartered is one of a handful of relatively new credit providers in the currency space, having started its FXPB operation five years ago. It has been voted the winner of the Best FX Prime Broker Bank category at the 2018 FX Week e-FX Awards.

“We like change, we like to be flexible, and we want to be part of the new wave of FXPBs that shape this market. We have the benefit of an extremely knowledgeable team, as well as the advantage of not having a legacy business,” says Luke Brereton, co-head of prime services at the bank.

Focusing on five key customer segments in Europe, Asia and the US, StanChart provides client clearing, rates intermediation and FX prime brokerage services, with a firm commitment to emerging markets.  

We like change, we like to be flexible, and we want to be part of the new wave of FXPBs that shape this market

Luke Brereton, Standard Chartered

While asset managers have not used prime brokers traditionally, they are increasingly looking at building out these relationships to swap out the many bilateral lines they tend to have. Clearing is also becoming an attractive option for some of these buy-side participants, as collateral and margin requirements become more pressing.

StanChart introduced a cross-margining solution that can reduce initial margin requirements by more than 40% for clients by netting across both cleared and uncleared interest rate derivatives and FX.

“We can net all the exposures into one number, which can mean upwards of a 45% initial margin reduction for a global macro fund,” says Brereton.

Collateral solution

StanChart also launched a collateral solution for funds that are required to hold their assets with their custodians. Deploying a pledge structure, the firm can settle variation margin on behalf of the fund without the client losing its legal relationships with the assets.

“The post-crisis regulatory effort was all about collateralising relationships. We built our services to help clients deal with higher costs and the complexity they are facing, and we are working on more roll-outs to make assets work more effectively,” he adds.

Meanwhile, the bank has started to clear its interbank non-deliverable forwards business, which Brereton describes as a milestone for the firm, as it widens the pool of liquidity it can offer to clients accessing anonymous electronic platforms.

“I think we are seeing a move away from banks being the main liquidity providers on platforms. We think non-bank market-maker platforms could grow further and we are looking to grow our presence in that space,” he says. “It’s always healthy to have competition.”

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