Bank of New York has created a joint venture to broaden its Internet foreign exchange trading system.
The banking company started MarketMarque Inc. with AVT Technologies Ltd., a London-based provider of wholesale banking software. The new company is offering an expanded version of iFX Manager, which Bank of New York introduced more than a year ago to handle Internet foreign exchange trading for its global fund management customers.
MarketMarque's version of iFX enables banks other than Bank of New York participate and enables fund managers, known as "buy-side" institutions, to execute trades with multiple banks in real time.
"One of the difficulties we had with iFX Manager was that the service could only be connected to one bank," said Richard Estes, vice president and global product manager for iFX at $83 billion-asset Bank of New York and a vice president at MarketMarque.
Fund managers engage in complicated transactions with many banks, and MarketMarque fulfills their need for a consolidated system, Mr. Estes said.
Bank of New York and AVT plan to have a number of banks eventually purchase equity on the utility, Mr. Estes said. It will transfer current iFX Manager customers - Mr. Estes would not say how many there are - to MarketMarque.
MarketMarque, which began operating last Thursday, is one of several foreign exchange companies to emerge in the last six months. It faces direct competition from State Street Global, which recently gave its system an expansion similar to Bank of New York's.
MarketMarque and State Street have "big advantages because they are big custody banks that house clearance and settlement assets for the mutual funds," said Larry Tabb, group director for the securities investment practice at TowerGroup.
Other companies, including CFOWeb.com and Currenex Inc., offer foreign exchange trading in an auction format. Soon to enter is Fxall.com, an alliance of seven dealers: Bank of America, Credit Suisse First Boston, HSBC, Goldman Sachs, UBS Warburg, J.P. Morgan, and Morgan Stanley Dean Witter.
MarketMarque users can trade with trusted parties just as they would over the phone. This is important for large funds, Mr. Tabb said, because information about a large deal shared with four or five different banks could move the entire market.