Printer Friendly

/FIRST AND FINAL ADD -- NY005 -- REUTERS LAUNCHES FOREIGN EXCHANGE TRADE MATCHING SYSTEM/

/FIRST AND FINAL ADD -- NY005 -- REUTERS LAUNCHES FOREIGN EXCHANGE TRADE
 MATCHING SYSTEM/
 DEALING WITH REUTERS (Backgrounder)
 The international foreign exchange market is like a non-stop, 24-hour telephone conversation. There are no physical exchange buildings as there are for the stock and commodity markets. Yet this market, buying and selling money for money, turns over in excess of $700 billion each day. Bank foreign exchange dealers and independent brokers communicate from their desks using every high-speed information and communication device available. And speed is of the essence. Each deal currently averages $8 million, although they can be much bigger, and tiny, rapid price movements, measured in fractions of a cent, can mean the difference between a profit or loss of several thousand dollars per deal.
 Fixed Price Communications
 Since 1973 Reuters has supplied video price information and news services to foreign exchange market professionals. Using these desk-top screens and keyboards, dealers can advertise their market presence to each other via constantly changing video pages showing their latest currency rates. There are now around 120,000 of these terminals used by banks, brokers, institutions and other corporate treasuries around the world.
 The Reuter Monitor Dealing Service, a keyboard and screen-based conversational dealing system for the foreign exchange and money markets, was introduced to complement the information system in 1981. This global network now enables 17,000 front-line dealers in 80 countries to contact each other, privately, in seconds. The service is supplied for a fixed monthly fee without incurring additional charges for the number of calls, time on the line or distance. Around one million dealing conversations, representing probably over half the total volume of world foreign exchange, are now conducted on the system each week.
 Electronic Assistance
 However, in such a volatile, price-sensitive market, financial risks and administrative costs have grown enormously over the past few years. So, in 1989, Reuters introduced a computerized dealer terminal for the established network. It was designed to reduce greatly the growing list of dealer headaches. This terminal is the first phase of a two-phase service called Dealing 2000. The Dealing 2000 Phase 1 (or D2000-1) terminal employs artificial intelligence which interprets each dealer's traditional free-format, telex-style conversation and extracts the essential details of each deal. These are then either automatically printed out in formal deal ticket format or sent directly, via an electronic feed, to the bank's back office for processing. Previously, each ticket had to be laboriously handwritten by the dealer with the attendant and costly problems associated with poor handwriting, inaccurate transcription or mislaid pieces of paper.
 The D2000-1 terminal, while "watching" each conversation, automatically suggests to the user complete lines of text appropriate to the conversation in hand. This can save a great deal of longhand typing, enabling complete phrases to be transmitted by the dealer using a single key. This software is designed to spot and warn dealers if it suspects there are errors in their own arithmetical calculations or they are trying to settle on a bank holiday date. By the end of 1991, over half of existing users of the original Reuter Monitor Dealing Service had decided to upgrade to the D2000-1 terminal.
 1992 Electronic Marketplace
 1992 brings dealers the benefit of fundamental change in dealing technology offered by the second phase of Dealing 2000. Reuters Dealing 2000 Phase 2 will broadcast instantly to traders around the world live "dealable" prices as opposed to the approximate, indicative rates which are shown on information-only screens. Each dealer will now be able to watch the live display of the best prices and deal by simply hitting "SELL" or "BUY" keys on a standard keyboard. There will be no need to contact another bank, request a price quotation, negotiate an agreed amount of currency, agree the deal, exchange payment instructions and then write a ticket. In D2000-2 the whole process can be completed in seconds with as few as two keystrokes. Price quotes will appear on screen anonymously, in keeping with the standard practice in the foreign exchange broker market.
 Currently, rather than trade directly, banks can deal via foreign exchange brokers in order to obtain the very best momentary "BUY" or "SELL" price available in the market. Foreign exchange broking houses use teams of brokers, dedicated to each currency, who are constantly in touch with a range of active bank dealers. On request they can quote the best available buy and sell prices. Until the moment of the deal, the prices are quoted anonymously. The names of the buyers and sellers are only revealed when an inquiring bank decides to trade. When a bank does a deal the broker charges both parties a fee related to the size of the contract.
 The D2000-2 network carries out this whole operation, including an automatic credit check for both banks, in about two seconds. The main benefit of D2000-2 will be a sharp reduction in deal fees compared with the traditional market. At the product's launch, each deal, regardless of amount, will cost a bank just $25. Even then, a bank will only have to pay the fee if it decides to deal at a price broadcast by another D2000-2 user. The "price quoter" (or market maker) for the deal pays nothing.
 Reuters marketing philosophy for its transaction products range is to use the latest information technology to solve genuine market problems. A similar product, INSTINET, has been successfully marketed by Reuters for several years for trading international equities. Reuters has also developed, in partnership with the Chicago Mercantile Exchange and the Chicago Board of Trade, a purpose-built, trade-matching system called GLOBEX for the international financial futures markets.
 -0- 4/16/92 AA NY005
 /END FIRST AND FINAL ADD/
 (RTRSY) CO: Reuters America, Inc. ST: IN: PUB SU:


GK-TS -- NY005A -- 9078 04/16/92 08:31 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Apr 16, 1992
Words:964
Previous Article:CITIBANK CREATES INNOVATIVE CREDIT CARD PRICING FORMULA; OFFERS LOW VARIABLE RATE BASED ON PERFORMANCE
Next Article:APPLE REDUCES PRICES ON POWERBOOK 100 AND 140, ADDS NEW 80MB HARD DISK MODELS


Related Articles
CLIENT TESTING OF NEW REUTERS DEALING SYSTEM IN JANUARY
REUTERS TRANSACTION PRODUCTS CHIEF TO LEAVE COMPANY NEXT YEAR
REUTERS LAUNCHES FOREIGN EXCHANGE TRADE MATCHING SYSTEM
REUTERS EXTENDS DEALING 2000-2 TO CONTINENTAL EUROPE
REUTERS STARTS DEALING 2000-2 IN ASIA
REUTER DEALING 2000-2 HITS 1,000 DAILY TRADES LEVEL
Reuters Launches Dealing 3000.
ICor Brokerage Expands FX Options Brokerage Service to North America.
Reuters FX broking service breaks record levels.
CME and Reuters Announce Launch Firms for CME FX on Reuters.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters