Best Banks Awards: Danske Bank
Danske Bank wins the Best Bank for Scandinavian Currencies prize at the 2018 FX Week Best Banks Awards
Historically, Danske Bank has had a strategic preference for building many software solutions in-house. This year, however, it made a decision to challenge this strategy after a deep dive in its FX business.
The pivot follows a move some years ago, when Danske decided to concentrate on market-making in Scandinavian units and G3, rather than competing globally across all currencies.
“We reviewed our full FX infrastructure, and decided that core competencies such as risk management and price formation will remain based on in-house technology; commoditised services such as connectivity and aggregation can be outsourced to external providers,” says Niklas Karlsson, global head of currencies at Danske Bank.
This doesn’t mean the Danish bank is not looking to invest in technology. On the contrary, says Troels Estrup, head of e-FX, Danske is looking to upgrade its underlying technology completely next year and invest in electronic client solutions.
“Although we are looking forward to an upgrade of our FX technology, we are not forgetting that we run a client-driven franchise, meaning our clients can also expect some tangible upgrades to the electronic offering they use every day,” he says.
Danske Bank has been voted the winner of the Best Bank for Scandinavian Currencies category at the 2018 FX Week Best Banks Awards.
Next year, algos will be made available to a wider set of clients through multi-dealer platforms and we will be expanding the available strategies also
Niklas Karlsson, Danske Bank
An example of new product investment is the bank’s algorithm suite, which until now has only been available to select customers. Karlsson says client demand for algo execution in Scandies has grown significantly over the past 12 months, as institutional market participants have become more comfortable with these tools in G10 trading.
“Next year, algos will be made available to a wider set of clients through multi-dealer platforms and we will be expanding the available strategies also,” he adds.
Transparent and smart
Transparency is key. Already, clients trading with Danske on a risk price get a full breakdown of costs involved in the quote, including XVA costs and mark-ups. “Our business is very transparent and we have some smart people who understand what our clients need help with,” says Karlsson.
Research and advisory remain key differentiators, as clients attempt to navigate markets. The bank also offers a strong suite of hedging products, although Karlsson notes that as result of low-volatility markets, the bank has seen FX options volumes decrease this year.
Low volatility has also led to less hedge fund participation, at the same time as the fragmentation of liquidity in Scandinavian currencies continues. Spreads have compressed in the region’s currencies, as global banks continue their efforts to wrestle away market share from domestic dealers.
“In Scandies, we are a serious risk-warehousing bank. If we moved away from our principal model, we would lose our competitive edge to global banks,” says Karlsson. “We have high-technology ambitions to make sure we stay relevant and we will continue to grow our franchise in Scandinavia next year.”
Interviews with the 2018 FX Week Best Banks Awards winners
Best Bank Overall for Foreign Exchange Dealing
Best Bank for FX for Banks
Best Bank for FX for Investors
Best Bank for Spot FX
Best Bank for FX Forwards
Best Bank for EUR/USD
Best Bank for USD/JPY
Best Bank for EUR/JPY
Best Bank for E-Trading
Best Bank for FX for Corporates
Best Bank for Currency Options
Best Bank for Structured Products
Best Bank for FX Prime Brokerage
Best Bank for FX in North America
Best Bank for Emerging European, Middle Eastern and African Currencies
Best Bank for FX Research and Strategy
Best Bank for FX in Asia-Pacific
Best Bank for Renminbi
Best Bank for Emerging Asian Currencies
Best Bank for FX in the Eurozone
Best Bank for Australian Dollar
Best Bank for GBP/USD
Best Bank for EUR/GBP
Best Bank for FX in London
Best Bank for Swiss Franc
Best Bank for FX Post-Trade Services
Best Professional e-Trading Venue
Best Vendor for Dealing Technology
Best Broker for Forward FX
Best Broker for Emerging Markets FX
Best FX Clearing House
Best Broker for Spot FX
Best Market Data Provider for FX
Best Bank for Scandinavian Currencies
Best Bank for South African Rand
Best Bank for African Currencies excluding ZAR
Best Bank for Canadian Dollar
Best Bank for Emerging Latin American Currencies
Best Vendor for Risk Management/Options Pricing Software
Best Prime-of-Prime House
BGC (no interview)
Best Broker for Currency Options
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