Bank of America has installed an online foreign exchange system with improved security and now it is just waiting for more of its corporate customers to use it.
Currently 20% of its 10,000 foreign exchange clients trade online, but the bank said it expects the system's increased security and functionality to boost that number to 80% within two years.
"Trade volume relative to our client base is not high, but we believe that it will grow exponentially, because there is so much more security today," said Christiane Mandell, head of global foreign exchange sales and research at Bank of America.
The FXO2 system, which began running Aug. 10, replaced an online service implemented two years ago.
The bank used feedback from its most valued foreign exchange customers, who said they wanted security, real-time executions, and service that did not require installations of extra software or private networks, Ms. Mandell said.
A number of clients tested the system from the end of July through the beginning of August.
In addition to trade executions, the new system offers strategy advice, analysis, and connections to clients' back offices for streamlined trading. Each month through the first few months of 2001, the bank plans to add new features, including a chat function for clients to keep an ongoing dialogue with their traders.
Bank of America built the system with the help of some external vendors. "Our idea of what clients demand is unique, and we have seen components that can bring that service, but not one vendor that has the whole package," Ms. Mandell said.
The Charlotte, N.C., bank trades a daily average of $80 billion of foreign exchange in 90 currencies, more than twice the daily volume of the New York Stock Exchange.
FXO2 is intended to complement a multibank, multidealer site, FXall, which Bank of America is developing with 12 other leading foreign exchange banks. FXall, expected to be launched early next year, will let clients trade with multiple dealers, find research, and see prices. Dealers would have direct access to their clients, but would not be able use the site to view research or trade with other dealers.
"We think clients will want to deal in both environments" of FXO2 and FXall, Ms. Mandell said.
"There are times when clients are working on a sensitive transaction, so they need confidentiality, and it's not the best alternative to go to a portal where a number of banks know about the transaction simultaneously," she said.
Credit Suisse First Boston, Goldman Sachs, HSBC, J.P Morgan, Morgan Stanley Dean Witter, and UBS Warburg were the original investors in FXall, along with $656 billion-asset Bank of America. Bank of Tokyo-Mitsubishi, BNP Paribas, Dresdner Kleinwort Benson, Royal Bank of Canada, Royal Bank of Scotland, and Westpac Banking Corp. are more recent additions.