World’s Best FX Providers 2017

Automation, “algo trading” and a tighter regulatory environment are driving change in the industry

Everyone knows that most foreign exchange trading now takes place electronically (75%), although big corporate traders still pick up the telephone when trouble lurks. Yet few appreciate the extent to which automation has gained a foothold in FX, the world’s largest market, in which participants trade more than $5 trillion daily.

Dealers are in the early days of what promises to be an all-out arms race in algorithmic trading, or “algo trading,” according to Greenwich Associates’ 2016 survey of FX users worldwide. Only 13% of top-tier FX customers use algo models, but that proportion approaches 25% among the biggest FX buyers, and 30% among hedge funds.

Meanwhile, bank traders are making widespread use of multidealer platforms, sometimes offering aggressive prices to gain market share. Nonetheless, single-dealer bank platforms still account for 20% of the trading by banks and hedge funds.

“Proprietary platforms give banks a means of retaining profitable trading volumes, so dealers are expanding these systems to provide a range of liquidity choices that enable clients to access the market in a variety of ways, including disclosed and nondisclosed liquidity, agency and principal trades, and links to exchange-based execution,” says Woody Canaday, managing director at Greenwich Associates.

Banks are still major liquidity providers to the FX markets. They continued to support the markets when most algo programs were shut off during the volatile trading that followed the Brexit vote last May. Banks are also valuable sources of information and advice on currency-related issues, particularly for companies venturing into emerging and frontier markets, where constantly changing restrictions may apply.

Meanwhile, the global FX industry is waiting to see how regulations will change next, now that it has finally adapted to the post-crisis world, defined by heightened reserve requirements and restrictions on trading. In the US, president-elect Donald Trump has called for a temporary freeze on new regulations. In the broader realm of financial services, it remains to be seen what will become of his promise to dismantle and replace the Dodd-Frank Act (2010) regulating Wall Street practices. A full repeal of the law seems unlikely, but there could be less-aggressive enforcement and a possible pullback of Volcker Rule restrictions on bank speculation in FX, according to a client alert from KPMG. The alert says there could be more-lenient treatment for domestic institutions than global institutions on international accords.

In this, our 17th annual World’s Best FX Providers Awards, we’ve selected winners in 93 countries and seven global regions, as well as the best providers of FX research and the best providers of corporate currency hedging.

With input from industry analysts, corporate executives and technology experts, Global Finance has selected the winners based on objective and subjective factors. Our criteria included transaction volume, market share, scope of global coverage, customer service, competitive pricing and innovative technologies. Decisions were further informed by provider submissions.

WORLD’S BEST FX PROVIDERS Continued…

GLOBAL WINNERS
Best Global Foreign Exchange Bank	UBS
Best Provider of e-FX Solutions	360T
Best Liquidity Provider	Thomson Reuters

REGIONAL WINNERS
North America	Citi
Western Europe	UBS
Central & Eastern Europe	Societe Generale
Latin America	Citi
Asia-Pacific	DBS Bank
Africa	Standard Bank
Middle East	National Bank of Kuwait

FX RESEARCH & ANALYSIS
FX Research	BNY Mellon
Fundamental Analysis	Brown Brothers Harriman
Technical Analysis	BNY Mellon
Forecasts	Mizuho Americas
CORPORATE CURRENCY HEDGING
Best Bank For Corporate Currency Hedging	Citi
Best Bank For Cash Flow Hedging	HSBC
Best Bank For Balance Sheet Hedging	Societe Generale
Best Bank For FX Options	Societe Generale
Best Bank For FX Forwards	Bank of America Merrill Lynch

Continued…

COUNTRY WINNERS
Algeria	Societe Generale
Angola	Banco Millennium Atlântico
Argentina	Banco Macro
Armenia	Ameriabank
Australia	ANZ
Austria	Bank Austria
Bahrain	Ahli United Bank
Belarus	Belarusbank
Belgium	KBC Bank
Bermuda	Butterfield Bank
Bolivia	Banco BISA
Botswana	First National Botswana
Brazil	Itaú Unibanco
Bulgaria	DSK Bank
Canada	RBC Capital Markets
Chile	Banco de Chile
China	Bank of China
Colombia	Banco de Bogotá
Costa Rica	Scotiabank
Cote d’Ivoire	Ecobank
Cyprus	Bank of Cyprus
Czech Republic	CSOB
Denmark	Saxo Bank
Ecuador	Banco de Guayaquil
Egypt	Commercial International Bank
El Salvador	Citi
Estonia	SEB Pank
Finland	Nordea
France	Societe Generale
Gambia	Ecobank
Georgia	Bank of Georgia
Germany	Commerzbank
Ghana	GCB Bank
Greece	Piraeus Bank
Guatemala	Banco Industrial
Hong Kong	HSBC
Hungary	OTP Bank
India	ICICI Bank
Indonesia	Bank Mandiri
Ireland	Allied Irish Banks
Israel	Bank Leumi
Italy	UniCredit
Jamaica	Scotiabank
Japan	Mitsubishi UFJ Financial
Jordan	Arab Bank
Kazakhstan	Eurasian Bank
Kenya	Stanbic Bank Kenya
Kuwait	National Bank of Kuwait
Latvia	SEB
Lebanon	BLOM Bank
Lithuania	SEB
Macedonia	Komercijalna Banka AD Skopje
Malaysia	Maybank
Mexico	Citibanamex
Moldova	Victoriabank
Mongolia	XacBank
Morocco	Banque Populaire du Maroc
Netherlands	ING
New Zealand	ANZ
Nigeria	Stanbic IBTC Bank
Norway	Nordea
Oman	BankMuscat
Pakistan	HBL Pakistan
Paraguay	Banco Itaú Paraguay
Peru	Scotiabank
Philippines	BDO Unibank
Poland	mBank
Portugal	Millennium bcp
Qatar	Qatar National Bank
Romania	BRD-Groupe Societe Generale
Russia	Sberbank CIB
Saudi Arabia	Samba Financial Group
Sierra Leone	Zenith Bank
Singapore	OCBC Bank
Slovakia	VUB banka
Slovenia	NLB Group
South Africa	First National Bank and Rand Merchant Bank
South Korea	KEB Hana Bank
Spain	BBVA
Sweden	SEB
Switzerland	Credit Suisse
Taiwan	CTBC Bank
Thailand	Krung Thai Bank
Togo	Atlantic Bank
Turkey	Akbank
UAE	National Bank of Abu Dhabi
Ukraine	PrivatBank
United Kingdom	HSBC
United States	Citi
United States	BNY Mellon (Honorable Mention)
Uruguay	Citi
Venezuela	Banco Mercantil
Vietnam	BIDV
Zambia	Stanbic Zambia

UBS has climbed to the top of the FX world thanks to its high level of customer support and innovative trading technology. The Swiss bank’s best-in-class UBS Neo FX platform is efficient and easily customized for clients. Satisfied customers are handing UBS significant market share gains. The bank tied for first place for global FX trading quality and market share in Greenwich Associates’ 2016 survey, which was based on interviews with nearly 3,000 corporate and financial users of foreign exchange services around the world. With offices in 54 countries, UBS has global reach and expertise in FX derivatives. The bank has fine-tuned its business model for the post-crisis market environment and is firing on all cylinders. For the third quarter of 2016, UBS reported an adjusted profit before tax of $1.3 billion, an increase of 33% year-over-year.

As an independent technology solution provider for the FX trading community, 360T offers a platform that connects corporate treasurers with more than 200 liquidity providers and generates $75 billion in average daily trading volume. The multi-asset trading platform for over-the-counter financial instruments is the center of competence of Deutsche Börse Group’s global FX strategy and is regulated by the German financial authority. Operated in a software-as-service setup, the 360T network is used by more than 1,600 client organizations worldwide and includes an integrated workflow solution that speeds up processes, adds automation and helps to reduce market risk. Combined with a data warehouse, 360T enables the user to define and implement a best execution policy.

More than 5,000 organizations, including corporations, asset managers, banks and hedge funds use Thomson Reuters’ FX platforms to trade more than $350 billion on an average day. Prices are sourced directly from the market, with more than 2,000 interbank and broker sources—the largest number of contributors of any market data vendor. Thomson Reuters added FXall QuickTrade capability to its Eikon solution to give corporate treasurers direct access to liquidity and straight-through processing capabilities. The Thomson Reuters swap execution facility (SEF) helps clients to meet regulatory requirements for trading FX derivatives under the Dodd-Frank Act. The Thomson Reuters FXTrading solution provides a single point of access to the industry’s largest collective pool of FX liquidity.

With operations in 100 countries, including 68 emerging or frontier markets, Citi is one of the main global banks serving large multinational corporations. Its CitiFX Pulse platform enables multinationals to track cash flow and balance-sheet exposure throughout their worldwide subsidiaries and to send supporting documentation online. Citi’s in-house systems help manage the documentation required for FX transactions in many emerging markets. The bank’s size enables it to invest in the latest technology and to price and execute large transactions efficiently. Citi offers a diverse range of derivatives products from forwards to highly customized exotic FX options.

UBS has been steadily gaining market share in recent years and is now the leading FX bank in Western Europe. Greenwich Associates ranked UBS as a European foreign-exchange-service quality leader in its 2016 survey. The UBS FX prime brokerage and clearing service combines innovative technology with global reach. The bank’s straight-through processing capabilities and innovative online platform make it possible for clients to have real-time access to their positions, as well as the bank’s reports and market-risk data. UBS processed a record number of currency trades during the two minutes of the pound’s flash crash in October. The peak was 50% higher than the bank’s previous record volume, and the bank’s system handled the surge without a hitch.

Societe Generale has a strong presence in the four largest CEE countries: Russia (where it owns 99.4% of Rosbank), Poland, the Czech Republic and Romania. Altogether, the bank operates in 14 countries in the region and maintains a network of 3,800 branches. SG has advised numerous CEE clients on hedging long-term risk with structured cross-currency swaps. The London branch of its corporate and investment bank has a dedicated emerging markets desk, where strategists work closely with SG’s locally based economists. The bank offers customized solutions to address unusual risk management issues, including mergers and acquisitions and balance sheet hedging.

ADDITIONAL RELATED CONTENT: 
Q&A w/Societe Generale: Hedging Currency Risk

Citi has retained its leading market share in Latin America, where it provides liquidity in complicated markets. Citi has executed local derivatives in 14 Latin American currencies. In 2016 the bank introduced post-trade flow automation on its CitiFX Pulse platform in some Latin American countries and launched futures trading on the Citi Velocity platform. The bank’s presence in 23 countries in the region gives it the broadest geographic reach of any bank. Citi has developed proprietary systems to handle the documentation required by FX regulators in many countries in the region.

Singapore-based DBS Bank is a major interbank market participant in China and other key Asian markets, including South Korea, Taiwan, India and Indonesia. DBS is among the highest-rated banks in the region, and its currency trading volume has grown rapidly in recent years. In Indonesia it has helped corporates deal with a host of regulatory changes introduced by the central bank in an attempt to control volatility in the rupiah, including mandated local currency invoicing and compulsory hedging for foreign currency debt. DBS China has begun actively promoting FX derivatives to its customers. This has allowed them to capture currency movements while at the same time reducing the concentration of risk in the bank’s own portfolio. Depreciation of the renminbi has hurt many Chinese companies whose receivables are mainly denominated in the local currency, though their liabilities are in dollars or other foreign currencies.

Standard Bank of South Africa, which also operates as Stanbic, has a presence in 19 countries in sub-Saharan Africa and is the leading liquidity provider for African currencies. It is the first African bank to offer a single global FX platform with streaming prices. Business Online, Standard Bank’s electronic banking platform for Africa, provides clients with a real-time view of their cash positions across products, currencies and countries. Although the dollar remains the main currency for the global commodities trade, the renminbi is becoming increasingly important. In 2015 alone, Standard Bank converted $200 billion of dollar flows to renminbi. Its strategic partnership with Industrial and Commercial Bank of China enables it to facilitate flows between China and Africa.

National Bank of Kuwait has the largest dealing room in Kuwait devoted to foreign exchange and money markets. It is equipped with state-of-the-art FX platforms and interfaces from leading global providers. For effective risk management, the bank’s front-office system is integrated with the trading platforms to ensure that all deals are promptly captured, authorized and reflected in the positions managed by the traders. The bank deals in more than 80 currencies and is a market maker in all Gulf Cooperation Council currencies. Its balance sheet size and financial strength enable NBK to execute large-ticket deals without moving the market. NBK has a global market presence, with offices in Geneva, London, New York, Paris and Singapore.

BEST FOREIGN EXCHANGE RESEARCH & ANALYSIS Continued…

The world’s largest custodian, with more than $30 trillion of assets under custody and administration, BNY Mellon has unique insight into cross-border investment flows. It provides investment management services in 35 countries and more than 100 markets. BNY Mellon is a global foreign exchange provider and an FX dealer offering support in all currencies, with a focus on emerging markets. The markets strategy team offers analyses of world economies and the fixed-income, equity and currency markets. BNY Mellon’s FX volumes continue to grow as it invests in its electronic trading platform. Its currency administration service is powered by proprietary iHedge software, which captures currency positions, calculates adjustments needed to maintain hedge ratios and targets, and executes transactions at predetermined and negotiated prices.

Brown Brothers Harriman’s foreign exchange desk is a leading market maker to global asset managers. BBH’s clients have access to a strategy team that provides informed commentary on currencies, as well as economic and geopolitical developments. BBH also has a dedicated FX emerging markets team. Clients receive global market coverage through a centralized trading desk with local relationship management. BBH offers a currency hedging solution created specifically for asset managers. It is designed to minimize tracking errors and transaction costs. BBH works closely with clients to create efficient and comprehensive FX programs.

ADDITIONAL RELATED CONTENT:
Q&A w/BBH: Global Events, Global Turmoil

BNY Mellon’s iFlow IQ focuses on global capital flows to help generate absolute returns, or alpha. The solution models the aggregate investment allocations that have been made during periods of crisis or calm in the FX, bond and equity markets since the 1990s. This enables clients to study daily data and gain insights into cross-border investment activity. BNY Mellon has developed quantitative models that extract important signals of what is going on in currency and asset markets. These signals have been rigorously back-tested and validated in live markets.

As part of Japan’s Mizuho Financial Group, Mizuho Americas is a hybrid of its Japanese heritage and its growing presence in the Americas. The firm is the winner of this year’s forecasting award as the top-ranked Mexican peso forecaster for the period from the fourth quarter of 2015 through the third quarter of 2016. Its forecast for the Mexican currency came closest to the peso’s actual finish during this period. Mizuho Americas’ currency strategists provide commentary on currency markets and economics.

Corporations operating internationally typically protect themselves from currency volatility using forward contracts, options and swaps. CitiFX Pulse, the bank’s online FX hedging platform, enables multinational corporations to track cash flow and balance sheet exposure to currency fluctuations, with associated hedges, across subsidiaries. Citi also helps corporations assess and quantify financial risks from FX exposure before implementing hedges. CitiFX Pulse provides access to 700 currency pairs.

Changes in exchange rates cause changes in a multinational company’s cash flow, both in terms of outgoing payments and incoming revenue. HSBC helps companies manage these risks with customized programs. The bank’s solutions are designed for the specific risk profile of individual corporations. The hedging programs also take into account local business practices, changing regulations and the existing financial infrastructure.

Societe Generale Corporate & Investment Banking (SG CIB) advises multinational corporations worldwide on hedging their balance sheets (assets and liabilities) to reduce risks from currency exposure. With its powerful FX platform and global reach, SG is able to handle extremely high volumes with ease. Its market risk advisory group advises corporate clients on strategic transactions, including the contingent hedging of FX risk in cross-border mergers and acquisitions. SG CIB also structures long-term hedging solutions using cross-currency swaps.

Societe Generale has been steadily increasing its FX options market share with corporate clients in recent years and is now the global leader. SG hedges complex exposures for corporates using the expertise of teams of financial engineers. Corporations are increasingly turning to combinations of options to manage their currency risk in a market characterized by episodes of high volatility. SG also offers advice on hedge accounting related to the needs of specific clients.

FX forward contracts are the most commonly used currency-hedging instrument for corporations. These contracts involve an exchange of different currencies on a predetermined date. The exchange rate is agreed and fixed at the outset. The parties to the agreement do not need to make any payments until the transaction date. Bank of America Merrill Lynch is a leading global provider of spot and forward currency trading.