European banks will have to diversify into the retail FX sector to generate volume, says Leverate’s Nicc Lewis

This morning, one of the hot topics concerns the issues facing some of the largest FX dealers in the world with regard to the downward spiral that their financial positions are taking, and how the non-bank FX industry stands in the midst of interbank giants which are losing billions and experiencing a landslide contraction of share prices.

Opinions on this subject are varied and as the major banks of Canary Wharf and the Square Mile rally to attempt to sustain their operations through 2016 by means of staff reductions, pay freezes and corporate restructuring, the FX business is once again faced with another period of fast adaptation.

Today, FinanceFeeds spoke to Nicc Lewis, VP Marketing at Leverate, who provided his perspective from within one of the world’s largest brokerage solutions vendors.

“The issues European banks are suffering is just the tip of the iceberg of many problems surfacing in Europe and globally” said Mr. Lewis.

“We are all getting smarter with 24/7 access to information and the ability to make better educated decisions. This also promotes volatility as the effect magnifies trends and people jump on the bandwagon as a result of their research. The effect also diversifies suppliers as consumers or customers are willing to move away from traditional suppliers in search of better value for money” – Nicc Lewis, VP Marketing, Leverate.

Mr. Lewis then explained the specific aspects of the FX industry in Europe with regard to the effect this will have. “I believe the Forex industry in Europe will be affected in three ways” he said.

“First, Banks and traditional financial companies will look into diversifying into the retail sector as an extension of the business in order to generate volume and mitigate their decline. Secondly, consumers are becoming more aware than ever of regulation and looking for the trust it brings. This will lead to opportunities for Brokers to build a reputation and business on trust.”

With regard to liquidity provision, Mr. Lewis concluded “Brokers are already looking to diversify their pool of liquidity providers to minimize their exposure and risk; this is a knock-on effect following SNB. It will be interesting to see how willing brokers are to diversify their risk from premium liquidity providers outside Europe. The technology is in place to allow for execution from Asia. Brokers should check that execution speed is no higher than 200 ms, and more like 100 ms.”

Featured Photograph: Leverate at iFXEXPO Asia 2016 in Hong Kong. Copyright FinanceFeeds