DirectDeal puts forex trades online

By RICHARD BRADDELL

WELLINGTON - National Bank has cut out the middleman, taking foreign exchange trading online with a system it says will improve transparency and control for business customers.

Key advantages include instant documentation, with the terms of each trade available on screen before they are accepted.

So far, 30 businesses have signed on to the service, branded DirectDeal, which is free of charge as long as four transactions are made each month.

National sees about 1000 users over time, and expects it to attract business from other banks.

"We don't see it as a way to reduce costs or service," said National's treasurer, Nigel Williamson.

But he did see it freeing the bank's currency traders from run-of-the-mill process work so they could offer more value-enhancing advice, such as on hedging.

Although DirectDeal is free, research, including the Reuters newswire and currency charting, equities and bonds, costs extra.

While simplifying currency trading, said Mr Williamson, the 168-bit encrypted system offered varying security clearances so that a company could devolve forex trading to different levels of the organisation, with preset limits and activities for individual staff.

On the flipside, chief financial officers could have instant oversight of their entire activities and the system could be made to interface directly into company financial management systems.

But Mr Williamson said one of the main advantages was that it simplified complex transactions such as variations to forward contracts generating a stream of numbers that were difficult explain over the phone.

DirectDeal was developed in California.