FX brokers may well be able to get their payment processing from JP Morgan!
At last, the banks which provide FX liquidity at its highest level are beginning to embrace real time payment processing
US banking giant JP Morgan is boosting its real-time payments offering by launching Sepa Instant in Europe.
Interestingly, JP Morgan is the second largest global interbank FX dealer by market share, the first being non-bank market maker XTX Markets placing JP Morgan as the bank with the largest FX dealing market share in the world at 10.49% of all FX order flow.
Therefore, if JP Morgan plays this correctly, the firm’s ability to interact with its own customers, those being OTC derivatives firms, on payment processing would be a very welcome development for retail FX firms and their service providers.
Payment channels and merchant services agreements have been a very challenging component of the entire electronic trading sector for many years now, with a substantial number of firms from outside the industry having been unwilling to provide payment processing services to online tradiing entities, often resulting in retail brokerages having to capitulate to the appalling and unprofessional channels provided by Israel and Cyprus based affiliate type payment vendors, most of which do not have a genuine system to offer, their roots being in affiliate marketing and binary options instead of genuine electronic payment provision.
The move by JP Morgan brings into effect the bank’s real-time payment capabilities in USD, GBP and EUR and is “another step towards offering real-time payments around the globe,” says Sungmahn Seo, MD, head of Emea payments and FX for JP Morgan Treasury Services.
Real time payments from a genuine banking institution, especially one that understrands our business so comprehensively, has to be a great thing. For example, although JP Morgan has not suggested at this early stage during the product’s life cycle that it would do this, providing a real time payments solution as part of a prime brokerage agreement to a prime of prime, which could then offer a holistic payment and liquidity solution to brokers would be a genuine FX industry breakthrough.
As it touts its leadership in the area, the bank says that clients benefit from immediate payment finality, easier reconciliation, better budgeting and improved liquidity management.
Art Brieske, MD, head of faster payments, JP Morgan Treasury Services, says: “As we create new opportunities and efficiencies for our clients via Sepa Instant and other real-time payment schemes we expect the take-up for real- time payments will grow exponentially.”
Let’s hope JP Morgan forges ahead and extends this service to its own liquidity takers, as it would make a huge difference to brokerages looking for good quality payment solutions from a company that not only understands our industry but originates it, and it would be a welcome diversion from the rot that has quite rightly been labeled by not only the industry itself but lawmakers as nefarious.