Sydbank Rate Manager and eTrader

Eurobase provided Sydbank with a rate management and web based single bank platform enabling the Bank to replace and upgrade their existing systems seamlessly, with reduced risk and increased uptake of FX e-trading by their customers.

Background

The Sydbank Group's principal activities include the provision of commercial banking services and investment banking, providing professional advice and services for retail, private and corporate clients. Sydbank is the fourth largest bank in Denmark servicing some 375,000 retail banking customers and a number of small-to-medium businesses, primarily in Denmark. Its branch network consists of more than 100 branches in Denmark, 3 branches in Germany and a subsidiary in Switzerland.

In 2009, the bank was operating a legacy system in support of their commercial FX business. The system transacted under 30% of this business electronically, with the majority being conducted using phone trading.

Objective

The bank set itself an objective to source a replacement rate management/price distribution platform to meet the following key objectives:
•   to implement a replacement ‘Sales’ portal as an execution platform for trading with its 3500 strong corporate customer base;
•   to increase the level of FX e-trading and STP from 30% to at least 80%;
•   to minimise the risk in price making and price execution processes;
•   to implement a long term solution to serve the bank’s current and future requirements.

The Solution

Following a selection process, the bank selected Eurobase to provide a solution based on its Siena e-solution products, namely Siena Rate Manager and Siena eTrader.
The FX asset classes enabled for the bank include Spot, Forwards, Swaps, Allocations and Limit Orders (TP, SL, OCO, OSO).
Underpinning the solution is the long-established Siena business engine which provides the product suite with fundamental support including:
•   a wide range of asset classes;
•   exposure/credit monitoring;
•   reporting;
•   dealer intervention;
•   interfacing to upstream/downstream systems;
•   connection to portals/and ECNs.
Siena messaging is built around IP multicast and therefore the bandwidth required is largely independent of the client population.
The Siena Rate Manager enables the bank to subscribe to market data from external sources and use this data to construct base product prices (market rates). The incoming rates are first sanity-checked against configurable rules and any rates falling outside the defined parameters are filtered out. The addition of skews and spreads is done after the rates and prices have been blended. The blended prices can then be margined using Siena’s Portal Configuration GUI to construct the final executable client price.
In addition to sophisticated margining (including channel, trading group, counterparty, product, currencies, tenor), the Siena Portal Configuration GUI provides the bank with a wide variety of controls including stream availability, rate source, minimum/maximum auto-trading amounts, trading hours, hit protection, availability of dealer intervention and stop loss limits for example.
The bank commissioned a Sydbank-branded version of Siena eTrader for use by its Client Desk, and Investment Centres, at which its staff capture trades on behalf of certain clients, and also by selected clients who can trade directly with the bank. eTrader is a browser-based application providing trading functions on a thin client. eTrader supports both 1 and 2-click ESP price streams as well as RFQ trading. Real-time blotters are provided to oversee and manage the trades and orders that have been placed. Subject to a variety of configurable parameters under the bank’s control, trades may be referred to the Sydbank traders for manual handling. Typical scenarios include limit breaches, trades outside normal amount bands and suspect prices. This dealer intervention process gives the traders the appropriate options according to the nature of the trade, such as manual pricing, sanctioning or rejection, as well as being able to conduct a dialogue with the eTrader user.
The Sydbank risk desk uses to the application to provide the dealer intervention service, but also to monitor limit orders and manage all trades via dedicated blotters.

The Effect

Working together, Eurobase and Sydbank successfully implemented the solution which was deployed into production on 9th July 2010.
The bank has confirmed that in just a few months it has witnessed a significant increase in the volumes of on-line FX trading as a result of implementing the Siena e-solution
Additionally, by using the Siena Rate Manager and the supporting Siena functions the bank has been able to improve pricing and streamline operations.
As a result of the successful implementation, and due to the additional capability within the delivered solution for the bank to harness its wider functionality, the bank is currently pursuing opportunities to derive further benefits from the Eurobase Siena e-solution.