Credit Suisse applies Open Banking APIs to interbank FX transactions

In securities, users can learn the settlement status of transactions for which they have issued instructions and quickly uncover issues leading to settlement delays.

The other interface acts on FX trades passing through the international Continuous Linked Settlement (CLS) system. Trade details and the counterparty’s Unique Transaction Identifier (UTI) are automatically updated, eliminating manual queries for internal and external reporting obligations.

“APIs enable innovative forms of collaboration and interoperability between banks,” explains Paolo Muzzarelli, head of transaction banking products at Credit Suisse. “With these solutions, we are supporting new forms for financial institutions to work together. The increased flexibility and efficiency benefits all parties and their end-clients.”

He says the bank is considering the introduction of new interbank APIs for safekeeping account positions, account balances and invoicing.

It certainly looks like the Tier 1 banks have a greater incentive toward providing modern methodology which is not normally their modus operandi. This is very likely to be largely down to the competition that they now face from the non-bank sector.

There is no greater innovator than competition, and Credit Suisse, whose revenues have been on the wane for some time now, is certainly feeling the pinch as non-bank market makers such as XTX Securities – a company which now has the largest market share of Tier 1 FX order flow worldwide – have pipped the banks over recent years.

Interbank FX dealing technology is usually consists of legacy infrastructure, and moves toward adapting the way banks interface with their counterparties is not common. The company did, however, recently created a global Investment Bank to build a client-centric global platform with critical scale for corporate, institutional and entrepreneurial clients.

In creating the investment bank in the summer of this year, initiatives included the creation of Global Trading Solutions and a globally integrated Equities platform. GTS was established to combine Credit Suisse’s International Trading Solutions and APAC Solutions to maximize the capabilities of Credit Suisse’s wholesale business for corporate, institutional and entrepreneurial clients. It is set to allow for further global technology integration, a unified risk set-up and the delivery of a wider range of products, greater scale and better pricing for customers.

It certainly looks as though the complacency that Tier 1 banks have showed over the past few years by curtailing counterparty credit to OTC derivatives firms – some of the Tier 1 banks’ most lucrative customers – has resulted in a bloody nose being administered by the non-bank market which is more efficient, provides much more tailored and appropriate access to liquidity and less nasty tactics such as last look execution or slippage and rejections than the banks.

Necessity is the mother of invention, as they say….