Modest Volumes Lead Telerate To Boost Minex Marketing

With volume hovering near 200 trades a day some four months after launch (TST, May 3), Minex Corp. is making another push for support from its shareholders. Efforts are currently underway in London and New York to convince Minex partner banks to make markets on the electronic order-matching system.

Meanwhile, Dow Jones Telerate has reorganized its marketing effort for Minex in North America. Minex president Steve Moore has left the company and Gary Meshell has added the title of managing director of Minex to his marketing mantle.

Meshell -- whose other title remains vice president of marketing for Minex and transactional products -- was hired last month (TST, Aug. 23) to help fill the slot left vacant by the resignation of Scott Rumbold, formerly Dow Jones Telerate vice president of transactional products.

Under the new structure, all North American Minex marketing and sales representatives -- about 15 people -- will report directly to Meshell. Although Meshell also has corporate responsibility for all other regions, those marketing and sales representative don't report to him directly.

According to Dow Jones Telerate executive vice president Julian Childs, the Minex partner banks -- which comprise 19 Japanese banks as well as Chase Manhattan Bank and Bankers Trust Co. -- weren't making markets on the system in the beginning.

Now, however, Childs says that the "banks dedicated to making markets are starting to take shape." In the last month Minex has "gotten some commitments from some important shareholders," he says. "It's more than just a shareholder saying 'yes we'll support it' and putting a terminal on their desk and finding that liquidity isn't there -- these are far more significant commitments."

Although Childs declines to name the banks which have made new commitments to the product, he says he is looking to attract four to five market makers per center, per currency. Minex has also gotten help from Jim Moriyama, the head of Tokyo Forex, which owns some 30 percent of all the shares, to convince banks to sign up, sources say.

Dow Jones Telerate expects to add six to eight new banks in London and about the same number in New York, Meshell says. "We will have one or two EBS banks trading in the next thirty days as well," he adds.

The new push, which some sources are referring to as a "relaunch," has also sparked plans to shorten the timetable on a European launch. Childs say Minex's original plans were to launch in Europe in the middle of next year, it's now looking at a launch in the first half.

Minex is currently live in Tokyo, Hong Kong, Singapore, London and New York. However, almost 70 percent of all trading is done in Asia and almost all of that has been in the yen.

Minex was the second matching service to be launched after Reuters' Dealing 2000-2, which started up in April, 1992. The third, Electronic Broking Service, went live last Wednesday, posting first day volume of 969 trades (see related story, this issue).

"We don't have a significant share in the Deutsche mark," Childs admits. "EBS and Reuters will be strong in marks and will be battling each other for that."

Meanwhile, daily volume on the Reuters system has slowly been increasing -- most recently, Reuters officials put it at 1,000 to 1,500 trades per day -- but Minex hasn't really gotten off the ground.

The owners of Minex include Telerate, the KDD telecommunications company, the K.K. Kyodo news service, the Tokyo Forex and Tullett & Tokyo brokerage firms, four Japanese tanshi companies and 21 banks.

Of the nine owner banks reached by TST sibling publication FX Week in London, only three-Mitsubishi Bank, Bank of Tokyo, and Chase Manhattan Bank -- say they are using the system at all. A dealer at Mitsubishi says that Nikko Bank, Mitsubishi Trust, and J. Henry Schroder Wagg, a British merchant bank, are also Minex users.

A trader at Fuji Bank says that the system is in the dealing room, but that the bank is "not up and running on it -- I'm not sure why." At Sakura Bank, a trader says the system "is in the process of being installed" and will be running soon. A trader at Sanwa Bank says only the Tokyo office of the bank has Minex.

It is not installed yet at the London branch, says this trader. However, Sanwa does have Dealing 2000-2 installed, although not yet running, because credit limits have not yet been set up on it, according to the trader.

At Sumitomo Bank in London, chief dealer David Eddy says that Minex is installed, but is not being used. "To be frank, it is not even switched on," says Eddy. No one has been watching it, he says, adding that the service has suffered from lack of liquidity and some initial technical glitches.

At Chase Manhattan, an official says that Minex is installed on two or three desks. Chief dealer Bashir Gazla was cautiously positive. "Minex is progressing slowly but surely," he says. But usage is "not consistent" at Chase. Chase also uses D2000-2, which Gazla says is "going very well."

Mitsubishi Bank foreign exchange manager Takashi Morisaki says the bank is doing two or three transactions per day on the system, most of them for less than $3 million. "We hope volume will improve dramatically," he says.

Ian Martin, dollar/mark dealer at Mitsubishi says he uses the system frequently and is optimistic about its future. "I think it will be a good thing when more people get on it," he says. He says Minex is cheaper than the Reuters or EBS systems, charging about 11 pounds sterling per $5 million transaction to the price taker, while the others charge a flat $25 per price-taker deal.

Martin says he is also pleased with Minex's willingness to make frequent software upgrades. One change that he is expecting soon will permit a new price to cancel an old one. At the moment, says Martin, dealers have to take out an outdated price first -- a procedure that's too slow in a fast market.

Though Martin praises Minex's user interface, he says that the prices he puts in are not hit very often. And when the market is very busy, he says, he doesn't have time to put in prices.

Bank of Tokyo foreign exchange director Shusuke Kato says that the bank is doing about two or three deals a day on Minex. "There's not a lot of volume on the system, and it's all very small transactions," says Kato. "But there is more liquidity in the early morning, when Tokyo is in the market, mostly in dollar/yen."

Kato says Bank of Tokyo is also a D2000-2 user, doing some 20 to 30 deals per day on the system. Indeed, Bank of Tokyo's activity on that system is enough to qualify it for the market-making discount incentives offered by Reuters (TST, Feb. 8). "It's very cost-effective for us," says Kato. Two junior dealers are currently using D2000-2, mostly on smaller amounts.

Kato says Bank of Tokyo is a user of Quotron's F/X Trader, the technological base for EBS, and has been approached about taking the third system. "We have a few problems with the contract," he says. "I think we'll wait and see how EBS gets on. We already have two systems; I definitely don't think we need three."

He and other bank executives are waiting to see whether EBS can come through on its promises of better liquidity through the market-making efforts of its 14 partner-banks, which include some of the biggest global FX market players.