French bank BNP Paribas plans to ramp up its cash equities game via a recently announced collaboration with New York-based market maker GTS.
The two financial firms recently signed a Memorandum of Understanding to improve the liquidity and pricing for BNP Paribas clients.
“Clients are asking for more liquidity on instruments that are already very liquid,” Adil El Batji, head of e-trading and BNP Paribas, told Markets Media. “Our belief is that we cannot achieve this without technology, which is one of the pillars of our strategy. One way to do it is for BNP Paribas to invest in technology internally only, or partner with someone whose core expertise is technology and providing liquidity into the market. Our choice was for the former.”
The firms are still determining the manner in which the bank and market maker will develop the liquidity provisioning. “At the moment, we are still working on it, and we’ll look to update you in the future,” said El Batji.
“This is not an arm’s-length relationship,” added Ari Rubenstein, co-founder and CEO of GTS. “This is a real collaboration where GTS and BNP Paribas personnel are working together with sleeves rolled up and shoulder-to-shoulder trying to deliver great liquidity for BNP Paribas clients.”
El Batji expects that the new collaboration also will expand the bank’s presence in the equities derivatives and structured product markets as well. “By increasing the liquidity on a given instrument, you create an edge on providing better pricing on all of the products linked to this underlying,” he said.
The MoU is the second such agreement between BNP Paribas and GTS.
The firms signed their first MoU in November 2017 under which GTS would provide liquidity and improved pricing in the secondary market for BNP Paribas clients in the US Treasuries market.
Although BNP Paribas is still ironing the precise details of the collaboration, it would like to see similar growth as it has had in the US Treasuries market, where the bank’s market share grew from 1.5% to 4% over the past year.
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