Single-dealer platforms have become an indispensible channel to market for any bank offering electronic trading services. In the FX market, for example, more than half of all screen-based flow now goes through SDPs.
Here are some of the compelling reasons to invest in a high-touch e-distribution channel.
Attract and retain more clients
- Protect and grow your client franchise, increase platform ‘stickiness’ and enhance client loyalty, by offering better value and better service.
- Create targeted solutions tuned to your clients’ workflows across the whole trade lifecycle.
- Integrate pre-trade decision support tools such as research, charting and chat to create a compelling client experience.
- Extend your brand by making your SDP the showcase for your full range of offerings.
Grow revenue per client
- A compelling direct trading channel can reduce internal leakage of flow and increase your share of your clients’ business.
- Internalize flows that have been ‘leaking away’ as internal, branch and affiliate users trade on competitor platforms.
- Extend the reach of your e-trading platform into all areas of the bank, reaching a greater number of internal users.
- Provide a compelling user experience that clients will use in preference to other channels.
Improve trading margins
Studies show that single-dealer platforms dramatically increase the profitability of client flows compared to third-party channels, often by 300-400%. They allow you to:
- Reduce brokerage fees payable to multi-dealer platforms, by migrating both internal users and external clients to your own platform.
- Optimize client pricing, spreads, margins and profitability of flows by offering granular per-client pricing tuned to client sensitivity per instrument.
- Increase client hit ratio (trades per quote) though optimised pricing and reduced rejection rates.
Control costs and make your sales desk more productive
It is costly and inefficient to force all direct client trading through the voice channel. By supplementing it with a direct electronic offering, you can:
- Better serve clients that prefer screen-based trading
- Free your sales traders to focus on delivering expertise and ‘market colour’ to high-value clients.
- Provide your sales desk with more sophisticated tools to provide optimal pricing to clients.
- Gain greater insight into client trading behaviour through real-time monitoring of client activity and mining of MIS data.
Bring new products to market fast
Compared to a multi-dealer platform, single-dealer platform radically cuts the time needed to launch new offerings, typically from months or years to weeks. This enables you to:
- Improve business agility when delivering new products and services.
- React fast to changing client needs and market conditions.
- Comply rapidly and inexpensively with emerging regulatory changes.
Do you need help building your single-dealer platform business case, or would you like to have a conversation about single-dealer platforms? Contact us.
Please take part in the Caplin Systems E-trading Survey 2014