Multi-bank battle heats up

LONDON -- FXall and Atriax will soon face competition from another player in the multi-bank FX arena, sources told FX Week.

Banks are in discussions with a software company that is developing an FX trading portal to rival the bank-owned trading portals, senior e-FX bank officials said.

Non-disclosure agreements with the un-named company prevent them from revealing further details. But, bankers told FX Week, the portal’s strength would be its backing from a "large proportion" of corporate treasuries, which already use the company’s dealing software.

But the portal’s weak point would be attracting banks to trade on the system in a crowding market-place, one official at a bank in London said.

"There are a lot of clients there with the back-end system. But they need the front-end -- and the banks may say it’s a portal too far."

With Currenex and FXConnect from State Street already executing multi-bank FX trading, Atriax live with a limited service, and FXall ready to launch this quarter, the market-place is becoming crowded, said officials.

Some banks are already irked that under the pricing structure recently announced by bank-owned portal Atriax, they will bear the brunt of the portal’s cost.

Atriax said it will charge bank users $15,000 per month per institution to use the network, screens and deal output ticket, and $5,000 for additional lines.

Banks that already post their research on Atriax for free will also start paying for the privilege, "and it’s not cheap", a senior FX dealer at a bank in London told FX Week.

The dealer, who works at a bank linked to both FXall and Atriax, said the plan calls into question the advantage of the portal for the sell-side.

"As a bank, you start to get suspicious where they are going to get their profits from. It implies their business models are not as good as they thought they were."

Daniel O’Callaghan, head of corporate communications at Atriax in London, said the firm will charge banks an undisclosed amount to distribute research, "but that won’t happen until we’re offering much more sophisticated research tools", he said.

Atriax members will be able to use these tools to target research more directly at customers, and assess what level of readership they are attracting, and how they compare in terms of readers to rival banks.

"This will allow banks to benchmark their research for the first time," said O’Callaghan, adding that reports would be made to banks with full client confidentiality.

A spokesman for FXall in London told FX Week that FXall would not charge banks to post their research -- although the company has not yet announced its full pricing structure.

Another buy-side initiative from the un-named software company is unlikely to give them a better deal, they said.

One e-FX official at a US bank in London said the software company had asked his bank to pay for software to connect to the planned exchange.

"It’s going to be difficult for [the software company] to attract the banks in," said another banker in London. He suggested a more likely proposition would be that the new portal link-up with FXall or Atriax to bring in liquidity.

O’Callaghan told FX Week Atriax is "emphatically not in discussions about alliances with anyone else attempting to be in the same space".

FXall chief executive Phil Weisberg declined to comment on whether FXall is in any discussions to link up with other portals.

FXall, which is set to launch in "the next few weeks" missed its initial first quarter deadline. Weisberg told FX Week: "We are currently working to ensure that the initial group of banks and customers set to go live are properly linked to the system and are able to effectively access the advantages offered by the portal.

"Our strategy is driven by the demands of our customers and liquidity providers. When FXall goes to market, we will offer a fully automated platform with comprehensive functionality."

He added the firm would also launch a portfolio trading system that is "unmatched in the industry".

FXall now has 44 member banks, while Atriax has 65.