Globalization may be all the rage, but the giants get all the tasty cookies. Smaller players, on the other hand, not only have to resign themselves to crumbs from the big table, but also have to pay high prices for them.
An example: Foreign trade deals entail foreign exchange (forex) transactions, which, unless you're a big bank or a Fortune 100 company, means acting through third and fourth parties and paying hidden taxes to the bank actually handling the trade in the form of a spread over the true cost of currency-sometimes upwards of 300 basis points for a small deal. The alternative: No export-import deal-bad news for an average-size bank trying to accommodate a client building an export business.
Enter Sonnet Financial, and its new product, FX Partner. For a flat fee of no more than $150, it will take a Turkish Lire/Zimbabwe Dollar exchange your customer needs, buy the funds transfer necessary to acquire chrome for re-plating Turkish truck bumpers, let's say, bundle it with similar deals, deliver it to one of the many banks for which it's an agent-in the U.S., BancOne-and supply the financial goods, all from the bank's or customer's desktop.
Thus, Sonnet creates an outsourced forex desk for small- to mid-sized banks, which can be distributed with its own cash management software to its customers. FX Partner runs on Windows.
Sonnet's business is more than ingenious; it lights up a fundamental fact about the $600 trillion forex market, namely that while the popular image of foreign exchange is of young maverick traders bestride the globe with billion-dollar trades in each hand, the mundane truth is that much of that traffic is the result of many, relatively small wire transfers connected to individual trade deals, all rolled up. Sonnet officials say the company makes its money on volume.
Included in the Sonnet package: Hedging and netting capabilities, both necessary to protect businesses operating on the high seas of international commerce. Sonnet svp Daniel A. Carmel declined to say how many clients and forex volume the company has.