In the $7.5 trillion-a-day global FX market, swaps represent 51% of the value transacted, according to the latest available figures from the Bank for International Settlements. The share of swaps has been steadily growing in the past decade as regulatory and market structure changes made trading these instruments more attractive and more popular – a trend that’s likely to continue.
HSBC has won the title of the world’s best FX bank for swaps due to the significant growth demonstrated by the bank and the continued investment it has made into its product offering, especially around electronification.
As one of the world’s largest banks, HSBC’s reach and scope makes it the perfect partner for clients to transact FX swaps with, as the bank’s global FX trading business provides prices for spot, forwards, non-deliverable forwards (NDFs) and swaps in 130 currencies and more than 3,500 currency pairs.
The integration of voice and electronic trading desks has enabled auto quoting for smaller trades while maintaining voice channels for larger transactions
Abdul Munim
In recent times, the bank has invested heavily in its electronic product offering, in a bid to enhance its ability to provide FX swaps liquidity to clients globally, 24 hours a day and 5.5 days a week. HSBC has also launched several new products and services in the past 12 months and it has enhanced its analytics offerings.
“HSBC has transitioned from traditional voice trading to a more electronic approach for executing FX swaps, allowing for both large and small trades to be processed through a platform,” Abdul Munim, global head of eRisk trading at HSBC, tells Euromoney.
“The integration of voice and electronic trading desks has enabled auto quoting for smaller trades while maintaining voice channels for larger transactions,” he adds.
HSBC is executing a multimillion-dollar strategy to increase electronification of its market-leading FX swaps business, including enhancing data pools and liquidity analysis, researching and introducing new FX swaps execution algorithms, and introducing dynamic spreading, custom tiering, and inventory-based skewing to provide clients with better pricing and deeper liquidity.
This trust and collaboration allows us to deepen our understanding of emerging market trends to further improve our FX swaps franchise
Richard Oliver
The bank is leveraging proven technology solutions from its FX spot and NDFs market-making businesses to support growth in FX swaps trading, including increasing auto-quoting limits and improving FX swaps pricing streams for clients. To support these efforts, HSBC has made strategic hires to ensure it maintains a broad range of expertise across the trading desks while supporting the chosen focus areas.
The bank has traders sitting in 25 countries and jurisdictions, offering unique insight into local market developments and providing clients with market colour and information about market dynamics and price movements. The work of traders is supported by sales teams in almost 50 locations, consisting of both dedicated voice and e-FX sales personnel who are able to support clients with their FX swaps trading needs.
The bank’s follow-the-sun liquidity offering makes it particularly attractive to certain client segments, such as corporate and real-money clients, who can trade FX swaps all the way out to 10-year tenors through the bank’s FX and rates trading desks.
As a result of the bank’s ongoing work around its analytics suite, the pricing process has been significantly enhanced, leading to more accurate pricing for large trades.
In the past 12 months, we have achieved substantial growth in our FX swaps business
Hanna Assayag
“We are the go-to bank for large FX swaps execution for many large corporate and institutional clients, due to the deep relationships we have built throughout HSBC’s history, and more recently as we further expand our FX swaps capabilities,” says Richard Oliver, global head of FX cash trading.
“This trust and collaboration allows us to deepen our understanding of emerging market trends to further improve our FX swaps franchise. Our compression methodology also enables us to leverage our large balance sheet effectively to provide liquidity to our clients for FX swaps trading,” he adds.
Clients appreciate the effort: the bank consistently nurtures long-term relationships with existing clients and attracts new users thanks to its client-first approach that relies on data to ensure competitive pricing and deep liquidity, as well as unrivalled support.
Hanna Assayag, head of quantitative strategies, eRisk, eNDF, STIRT & EM rates at HSBC, says: “In the past 12 months, we have achieved substantial growth in our FX swaps business, as we implement our multi-year strategy to increase electronification of FX swaps pricing and execution, through sophisticated trading algorithms to build on HSBC’s historical success in other markets.”
