SugarCane Capital launches FX trade cost analysis solution
Boutique FX broker consultancy SugarCane Capital has partnered with Just (www.gojust.com), a provider of automated FX market analytics.
The collaboration is designed to ensure SugarCane’s clients have absolute visibility over the charges levied by liquidity providers when making foreign exchange transactions, allowing transaction costs to be minimised.
Foreign exchange fees are typically marked up in an opaque manner by the sales desk of a bank or brokerage. Owing to the fast-moving underlying market, this makes it difficult for clients to understand exactly how much they are being charged on each trade, per currency or instrument. The technology developed by Just delivers the highest level of transparency, empowering customers with an audit trail showing exactly what costs they are incurring across providers, currency pairs and instruments.
Robert Brown, CEO of SugarCane Capital, says: “The pricing of FX products has long been a bone of contention, with clients struggling to make a fair comparison of what they pay different providers. Whilst growth in the non-bank brokerage market has delivered an element of price competition here, using the Just solution means intermediaries know they have to be transparent when disclosing charges.”
Banks and brokers typically trade with ultra-low execution fees and generate revenue by marking up the bid/offer spread. A lack of transparency here facilitates discriminatory pricing, but with a market that is fast moving and not centrally cleared, understanding the scale of this additional margin can be challenging.
Anders Nicolai Bakke, founder and CEO of Just, says: “Since our launch last year, we have analysed more than USD40 billion in traded flow between companies and banks, and built a strong reputation in the Nordic market. Clients have been able to make significant savings on their foreign currency transaction costs as intermediaries are forced to be transparent with their fees. SugarCane is our first partner in the UK, and we look forward to working with them to ensure their clients benefit from the significant cost savings which are delivered by Just.”
In one example, a medium sized customer of Just saved an average of five basis points on its FX mark up, by using the available technology to benchmark pricing and better understand charges being incurred right across the company’s treasury functions.
Brown, adds: “We know that the most sophisticated clients get better FX pricing from their intermediaries. For those SMEs currently using banks for their brokerage needs and who are doing at least GBP30 million worth of FX turnover each year, this collaboration ensures they have access to the very highest quality trade tools which will in turn significantly reduce their transaction costs. In the event clients aren’t seeing a saving, we will refund the annual license fee in full.”