Onboarding for new EM FX plays is a grind — is it getting worse?

asked by u/mwhite · 3d · 2 answers

Seriously, the hoops you jump through for a decent broker or PSP when you're dealing with anything outside the G10 in EM FX are ridiculous. I'm talking about the smaller, but still legitimate, institutional plays. KYC/AML demands are fair enough, but the sheer inefficiency and time sink for onboarding, especially for non-OECD registered entities, is just brutal. We've had situations where we're ready to deploy capital into $ZAR or $MXN for a specific short-term arbitrage, and the onboarding process takes weeks, by which point the edge is gone. Then you factor in the often-exorbitant spreads compared to developed market pairs, and the payout reliability can be spotty with certain counterparties. Is anyone else finding this friction is actually increasing, or am I just hitting a particularly bad patch with new providers lately?

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Top answers

  • u/sami_sultan· 4 pts· 3d

    It definitely feels that way. Have you noticed any particular regions or currencies where the onboarding is even more painful than others, or is it pretty consistent across the board for EM FX?

  • u/set_trader_th· 0 pts· 3d

    It's definitely not getting easier. We've found that even with established relationships, any new jurisdiction often means a whole new round of 'enhanced due diligence' that feels more like an obstacle course than a regulatory check.

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