At its core, FX Prime Brokerage is a multi-faceted, relationship oriented business. Notwithstanding the obvious benefits of increased flow potential and the revenue diversity that fee income provides, most recognize that an FXPB relationship will invariably afford them access to new opportunities as clients mature and their needs change. A good FXPB becomes a source of other products, services and information to their clients and that's certainly a privilege worthy of competition.
To be a top level full service FX provider one has to provide top level fx prime brokerage services. The FXPB market has experienced growth due to both increased demand and supply of PB services. Increased demand due to the rise of FX as an asset class; an increase in the number and size of Hedge Funds, Real Money absolute return portfolios, and proprietary trading firms, as well as the development of the retail-focussed broker-dealers.
The number of FXPB suppliers has grown to tap into this demand, leveraging FX franchise businesses and targeting broader cross-asset class servicing opportunities. Other supply factors include the uptake of multi-venue electronic trading and associated automation of booking processes, plus the availability of FX direct market access (EBS, Reuters etc). Duff: As with most of the Financial Markets, FX Prime Brokerage continues to be a very competitive space in many regards. Technology has certainly allowed for higher velocity programs and strategies. The resulting higher volumes give clients a greater foundation for aggressive pricing. The increased demand for Prime Brokerage services have certainly increased awareness of the opportunities to most firms on the street. However, the majority of premier clients are largely covered by the top tier banks providing Prime Brokerage services.