Winners rationale

2019 was a year marked by dramatic changes in BNP Paribas Wealth Management’s foreign exchange advisory business with numerous enhancements and improvements to its platform, sealing its leadership position in the industry.

Against a backdrop of a U-turn on US interest rates and the resultant changes in currency views, BNP Paribas Wealth Management managed to remain one step ahead of the market in its calls. Its focus on cross-market linkages, volatility, and positioning, apart from just spot levels, allowed it to make sure that its trades presented not just a call, but the smartest way to express the view. This was reflected in its track record: as of the end of 3Q, the bank had come up with 112 trade ideas, with a hit ratio standing as high as 87%.

One of the biggest FX calls BNP Paribas Wealth Management made last year was to buy gold, both on a cash basis and through structures designed to capitalise on volatility. For example, in February, the US Fed Chair pivoted on interest rates using language that the French bank interpreted as dollar negative. The bank suggested clients play the move using a proprietary ‘buy gold propulsion structure’, which successfully achieved clients’ full profit target within 9 days of entering the trade. Another call worth highlighting was the bank making use of the increased volatility and distorted skew around Brexit to enter a ‘GBP/USD skewed structure’. This call knocked out in one week, with clients receiving the entire profit target immediately with a deep discount to market price.

Bearing in mind the philosophy of “offering clients solutions rather than trades”, BNP Paribas Wealth Management’s FX investment advice goes beyond the directional calls. It is based on its thorough understanding of clients’ objectives and customised to their portfolios in order to optimise clients’ capital usage. The offering of the bank is spread across the full spectrum of clients: from gamma trading for institutional-like investors to FX embedded in capital protected structures for risk-averse clients.

As a key enhancement made to the advisory offering last year, the bank designated a dedicated FX advisor for its sophisticated clients, in order to provide them with customised, institutional-type, solution-driven coverage and services. Additionally, core clients were able to get advice from an up-skilled RM team, supported by digital tools with additional access to a dedicated FX advisor. In 2019, the firm launched an FX digital transformation project, allowing RMs to directly price and execute linear products on FX and access live pricing on exotic options and structures, without depending on the FX desk.

Undoubtedly, the unrivalled FX platform with a dedicated team resulted in remarkable business growth, with revenues from direct access advisory nearly doubling in 2019, serving as the largest growth engine for the bank’s FX business.

BNP Paribas Wealth Management is Asian Private Banker’s choice for Best Private Bank – FX Advisory.