Banks turn to analytics playbook to take on FX platforms

For foreign exchange dealers, high transaction fees on multi-dealer platforms (MDPs) have slashed FX spot and swap margins, and – for all but a handful of the largest players – made business unsustainable. Now, in a bid to restore eroding profit margins, banks are backing beefed-up analytics tools to coax clients back to single-dealer platforms (SDPs).

For the most frequently electronically traded FX products, buy-side firms have migrated en masse to MDPs. Between 2016 and 2019, market share of