Digitec, a Germany-based data company specializing in pricing for foreign-exchange markets, has expanded to Asia with a presence in Singapore.
Christopher Johnson, formerly BNY Mellon’s head of electronic FX and G10 spot trading in Singapore, has joined the business to drive sales and service clients in the region.
The vendor has been in business for four decades, providing software to automate how banks and other market participants get prices for foreign exchange crosses, swaps, and non-deliverable forwards.
Since central banks began to raise interest rates last year, volatility has increased in forex markets. More private banks have encouraged their clients to trade currency based on changing interest-rate differentials. Asia has many markets with capital controls, so foreign investors are heavy users of synthetic NDFs, which are also now more volatile.
“But you can lose a lot of money if you don’t have an accurate swap price,” Johnson said.
Automating price quotes
He joined because as a veteran forex trader, he used Digitec earlier in his career, notably at WestLB, a German bank.
Although forex is more automated today, the process hasn’t changed. A sales trader gets a call from a client – a corporate treasury, a fund manager, or another bank – who asks for a price quote. The sales trader needs to check it with their trader, who is either operating off the bank’s Excel spreadsheet that is used across the organization, or who must call a broker to get a reference.
During Johnson’s time at WestLB, he automated the process using Digitec’s software that generates a spreadsheet with spot and swap rates across currency pairs and crosses. It could integrate a reference check to provide a real-time yield curve for swaps, as well as alert a sales trader if there were errors. Automating the process sped up the time to get a price back to the client, while cutting costs.
Several factors led to the firm’s Singapore expansion. The rise in global volatility has led it to extend its reach globally, opening a London office in 2021 to be closer to the leading money center in Europe.
Singapore has also positioned itself to become the region’s leading foreign-exchange center. It has opened a huge data center, SG1, to handle currency trading, which has allowed it to step ahead of Tokyo as the leading forex center in Asia Pacific, particularly for NDFs.
“I see Singapore will grow as our London office has, because D3 [the company’s pricing engine] is the tool for NDF pricing.”
Like many software vendors, Digitec now operates its products on a subscription basis. It is also the operator of the Swaps Data Feed, in partnership with 360T, a forex trading solution under Deutsche Borse. This is used by banks to generate real-time reference prices for swaps.
