Offshoring, and a large rise in trade volume for Cash FX and FX Options, has led to big reductions in the Cost per Trade, reports a survey by Z/Yen Limited, the city based Market Intelligence firm. 2006 saw huge volume growth in the Cash FX and FX Options markets. Trade volumes were up 70% for Cash FX and FX Options but down 15% for Money Markets. These volume increases together with new technology have led to significant reductions in the market average Operations Cost per Trade.
After 2 years of minimal impact to the Cost per Trade, the results of this year’s survey suggest that the full savings from relocation to low cost locations is now starting to be realised. The 2 year lead time reflects the time taken to for local staff to become sufficiently experienced and for systems and processes to become mature.
At the same time, it is clear that the trend of relocating staff to lower cost locations continues. Two thirds of participating banks now have some staff in secondary locations and half now have some headcount ‘offshore’ in low costs areas, mainly India.
“It is clear the banks’ strategy towards moving processing offshore is now paying off. It is also a welcome finding however that Money Markets costs have also reduced and that banks have continued to invest in what is quite an ‘old’ product.” says, Jeremy Smith, Head of Z/Yen.