AusMarkets put on hold


SYDNEY -- Regional multi-bank trading portal AusMarkets is now unlikely to go ahead, chief executive Simon Narroway told FX Week, after the board of directors voted unanimously to put the venture on hold.

Narroway cited the current economic climate and technology problems.

Although the shareholding banks, ANZ, National Bank of Australia, Commonwealth Bank of Australia and Westpac Banking Corp, will continue to assess the portal’s technology options, Narroway said AusMarkets had not found a suitable technology solution in the year since it was first announced.

He added with reference to the global economic climate: "There’s a feeling of nervousness amongst customers, and AusMarkets directors were worried that this would affect take-up rates."

AusMarkets had already decided to exclude FX from its product range, saying it felt it could not compete in an already overcrowded e-FX market space: "FX is probably beyond our scope," he said last month (FX Week, October 22). Instead, the firm said it would focus on money markets and fixed income products.

Industry analysts surveyed by FX Week said other planned and existing portals could face similar problems. "Committing to a trading portal is an expensive proposition and a path that banks won’t go down in a global recession," said David Gilmore, partner at FX Analytics in Essex, Connecticut. "Even the big portals need to show the same hard numbers, and prove that customer take-up rates will sustain a profitable business within a certain period of time."

The smaller portals are already giving up, said Gilmore, citing high start-up costs and massive ongoing costs as the major obstacles to survival.

After looking at more than 20 different technology solutions, AusMarkets had hoped to host its service on an existing portal, which would speed up time-to-market and be significantly cheaper than building the portal from scratch.

All five employees at AusMarkets in Sydney, including Narroway, will leave the company by the end of this week.

Observers now wait to see whether another regional portal, Centradia, will launch as scheduled in early 2002. Technology firms SunGard and FNX are also expected to launch multi-bank trading services next year, joining existing products from independent firm Currenex, bank-owned consortiums Atriax and FXall, and Boston-based State Street Corporation, which launched multi-bank portal FXConnect last year.

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