Creating Simplicity and Transparency in Global FX Markets

by Lee Butler, Global Head of FX eDistribution, HSBC

Technology is having a radical impact on the way that people and organisations communicate, do business, and access and share information. While this is most apparent in our role as consumers, we are increasingly demanding the same degree of convenience and real-time access in our working lives. Banks and technology vendors have not been slow to respond to these changing client demands, with the rise of digital solutions that help make everyday treasury tasks quicker, easier, more efficient and secure. This is the background to HSBC evolve, HSBC’s new generation, global FX execution and exposure management platform, which is designed to ultimately become a core element of clients’ treasury technology framework.

The corporate challenge

One of the biggest challenges facing corporate treasurers is that managing FX risk is only one element of their role and as such, they need to balance the time and resource required to manage FX alongside other key responsibilities such as cash management and funding. At the same time, 2017 is unlikely to be a quiet year in the FX markets with uncertainties arising from the new US presidency, the start of the Brexit process and elections in countries such as France and Germany, to name but a few. Regulatory change is also likely to have an impact on the way that treasurers manage their FX exposures as they prepare for MiFID2, which comes into effect in January 2018.

Introducing HSBC evolve

In this environment, treasurers are seeking one-stop-shop solutions that offer a robust, secure approach to managing FX risk with ease of execution, price transparency and global consistency. Ultimately, the aim is to have more time and capacity to focus on more analytical and strategic tasks across the diverse spectrum of their responsibilities. This is the background behind HSBC evolve, our innovative single dealer platform, available 24/5. HSBC evolve is simple and intuitive, and designed to offer clients greater transparency and control over their FX exposures. Most importantly, it offers the ability to trade in our covered currencies in a reliable and secured manner when needed. For example, HSBC evolve currently supports over 460 currency pairs, both deliverable and non-deliverable, across Asian, European and North and Latin American markets, with seamless access to the bank’s liquidity network. In addition to pre-trade and execution capabilities, including spot, forward and non-deliverable forwards, HSBC evolve offers a post trade suite which allows the client to confirm more complex products such as FX options electronically and simplify FX confirmation, with a suite of electronic post-trade services (box 1 - see page 2).

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A valuable tool for global corporations

What was clear from early discussions with clients was the strong demand for a straightforward FX dealing platform, which was soon emphasised by the rapid adoption of HSBC evolve. The geopolitical events and the high volatility and currency shocks that resulted exacerbated user demand for the solution in 2016, which is now in use by 5,000 clients in 30 different countries. Throughout this period, clients emphasised the value of HSBC evolve to their business, in particular that they could manage their FX during difficult times in a reliable, transparent and consistent way without the need to dedicate additional resource or technology.

Some of the specific characteristics of HSBC evolve from which clients can also access includes the ability to transact across multiple regions from one platform, hedging on behalf of different treasury centres or business units against different HSBC entities if required. Furthermore, clients can see all FX activities executed with HSBC regardless of how the trade was executed: therefore, if a trade is executed through other channels or by telephone, it is still shown on HSBC evolve. This brings great value to global corporations, whether they operate a regional treasury organisation or on a more decentralised basis, providing treasury with a single view of exposures and hedges across the business, allowing them to evaluate and mitigate their risk at a group level more easily.

A platform shaped by clients

A key design feature of HSBC evolve is that it reflects the fact that every organisation is different, and therefore, treasurers want to view and interact with data in various ways. Consequently, the platform has a wide range of optional features that allow each client to tailor it to the specific needs of the organisation. This client-centric approach is not only apparent in the structure of the platform, but also its ongoing development. We are engaging clients proactively in the innovation and delivery process to ensure that we prioritise the functionality, usability and reporting capabilities that they require. We do this in a variety of ways, from one-to-one dialogue through to breakfast workshops and inviting clients to pilot new features in which they have a particular interest.

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Banks such as HSBC are accustomed to having structured, well-documented development plans, so it is an exciting departure to embark a client-centric development strategy where the future direction is largely unknown. Furthermore, we are embracing best-in-class design and development theory to build new capabilities in HSBC evolve quickly, responsively and collaboratively to meet the fast-changing needs of our clients. For example, one of the popular requests at a recent client breakfast event was to develop mobile access to HSBC evolve. We are also starting to bring in research, analysis and news onto the platform, providing users with a hub for all their transactional and information needs, as well as further expanding our order capabilities. Just as its name implies, however, we aim to grow and adapt HSBC evolve in line with client needs, and the changing nature of the markets in which they operate.

For more information, please visit www.gbm.hsbc.com/evolve/overview