In working with correspondent banks in developing countries for more than two decades, INTL FCStone Ltd spent a fair amount of time collecting market information over the phone and through e-mail from those banks to share with others. It ultimately determined there was a better way to do this.
The London-based unit of financial services provider INTL FCStone Inc. has decided to aggregate that type of information on a site its clients can access for market information when considering cross-border payments.
The Global Payments Division of INTL FCStone Ltd has launched the Global Payments Network, a cross-border payments "intelligence portal" for its clients, providing market and news analysis that could influence foreign exchange in those markets.
The company obtains information from its 300 local correspondent banks in addition to government and regulatory bodies and other participants across markets to compile what amounts to an in-house news service.
The new site can serve the humanitarian agencies, development companies or global corporations that are INTL FCStone clients when a social, political or natural disaster has occurred within a market, says Clayton McDonald, global head of sales at INTL FCStone.
"If a corporation is trying to send funds to West Africa, and there happens to be a coup there, we have the daily information from the trading desks at our correspondent banks to provide a unique pipeline as to what is happening and if the banks are open," McDonald said.
The same process would hold true if a market suffered a severe earthquake, he added. Aware that natural disasters are not uncommon in developing countries, the company created a donation portal last year to make it easier to provide aid.
Businesses can generally find all of the information they need in major markets dealing with pounds, euros or yen, McDonald said. "But when you think about the Pacific Islands, Central America or Southeast Asia, that is not the case," he added. "We are covered by the banks in those countries."
In that sense, the Global Payments Network provides all of the information a company would need to know about currencies such as the Rwandan franc, Vietnamese dong or Guatemalan quetzal. The new network complements another INTL FCStone portal service provided last year in which real-time information on exchange rates for these types of "exotic" currencies is readily available.
Network users are provided a link to the portal site, and alerted through e-mail blasts when critical breaking news unfolds or relevant updates are available.
The treasury function of large multinationals needs to make many decisions around international payments, including which network to use, be it Swift, wire or checks, as well as which service provider to use, said Gil Luria, director of research for equity capital markets at D.A. Davidson & Co.
"In addition they want to know how to hedge various currencies, comply with local payment regulations and reduce fraud risks," Luria said.
These challenges become much more complicated when a company operates in emerging markets. "A service that provides ongoing information on developments that could affect those decisions could be very valuable for the decision makers at these multinationals," Luria said.
The Global Payments Network already has about 250 users and more requests come in daily for access to the portal, McDonald said. The company has between 600 and 700 clients, while operating in 165 countries and with more than 140 currencies.