Bear Stearns is the first financial institution to signal its participation in Forexster, an online FX auction system devised by former Valaquenta Capital hedge fund manager Arman Glodjo.
Taking its cue from the Naspter song-swapping system, Forexter's patent-pending trading application supports direct order matching and "request-for-quote" services between participants. All users can trade anonymously with all credit-providing financial institutions and their clients, effectively buying in and out of currency pairs while preserving existing credit relationships.
In practice, Bear Stearns and its clients, and all other supporting banks and their clients, may directly participate with one another as price-takers and price-makers. In this way, the platform enables all participants to trade with each other without the need for direct credit relationships.
Ross Taylor, senior managing director at Bear Stearns says: "We believe that Forexster is part of the next generation of FX trading applications. This facility offers our clients an additional option in trading FX."
It is not known whether Bear Stearns has taken a stake in the Bermuda-based start-up.
Separately, Forexster has appointed Kresimir Penavic, a retired principal and former senior research scientist at hedge fund Renaissance Technologies to its board of directors.
"I believe Forexster to be excellently positioned to become the reference point for dealing solutions available to the interbank, corporate and speculative community," says Penavic.