December 09, 2013

Despite the trend toward multi-broker platforms in foreign exchange and other asset classes, single dealer platforms are still in vogue and highly profitable for banks, according to Caplin Systems.

Some brokers that want a modern single-dealer platform are held back by the cost and technical challenges of bringing a new single-dealer FX online trading system to market, the company said. Today the company announced Caplin Direct, a hosted managed service for banks that want to modernize their single dealer platform (SDP).

Caplin Direct eliminates these barriers by offering a hosted SDP as a service, according to the release. The SDP connects to existing e-trading systems, whether vendor-hosted or deployed. Once the software is connected to a trading system it provides an ‘out of the box’ SDP, while providing room for branding, customization and extension with features and workflows, the company said.

A bank can bring a high-end FX online trading offering to market in a matter of weeks, at a fraction of the cost of an in-house build, the company maintains.

“We have long been the solution of choice for banks wanting to build and host their own SDPs,” commented Paul Caplin, CEO of Caplin Systems in the release. Caplin supports larger banks that are looking for a technology stack that they can deploy and customize themselves, according to the CEO. “But now we are able to cater for the many banks that would prefer a managed service that just works,” said Caplin.

Over 50 percent of all screen-based FX flow now goes through single dealer platforms, and SDP volumes are up 32 percent year-on-year, according to figures from the Bank of England, cited by Caplin’s release. SDP flow is typically four times as profitable for a bank as flow through multi-dealer platforms, the firm reported.

Caplin is in talks with regional banks around the world about using the new service, according to Adam Hawley, commercial director of Caplin System. Since Caplin Direct is built on the same technology used by Citi for its Velocity FX single-dealer platform, Hawley said, “Banks can absolutely trust the reliability and security of the technology and rely on us to minimize the costs and risks involved in building a high -performance single-dealer platform.”

In addition to FX, Caplin Direct plans to support other asset classes including equities and futures. The service offers optional pre-trade content such as news and charting and offers the ability to customize for other customer segments such as institutional, corporate, retail and internal sales desks. While a desktop version is now available for web clients, tablet and smart phone versions of the product will come out in Q1 2014.

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Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in ...