New vendors bring discount trading to foreign exchange.

U.S. companies in search of high-growth global markets are courting foreign trading partners. This increase in international trade has not gone unnoticed by foreign exchange specialists marketing their expertise to corporate clients.

Several firms monitor trading activity in the foreign exchange markets and maintain contacts with currency brokers and bank currency desks so they can direct clients to the best exchange rates. One firm, Sonnet Financial Inc. of San Mateo, CA, even offers clients commissionless foreign exchange trades - a departure from the conventional spread-based pricing charged by FX banks and brokers.

Rather than charge clients a spread over the interbank rate, the wholesale rate brokers quote on currency trades of $1 million or more, Sonnet charges a fixed fee of $75-$150, depending on the size of the trade. To get the best rates, Sonnet pools the demands of all clients for a particular currency and then makes a single trade.

"A lot of people paying in spreads don't realize what it's costing them," says Helen Kane, an international treasury consultant in Deloitte & Touche's, San Jose, CA, office. Also, she says, many treasury and FX managers aren't comfortable calling brokers for the latest FX rates.

That was the situation at UNICON International, a $22-million San Francisco trade services company, until October 1994, when UNICON began clearing its FX trades through Sonnet. "It was a real eye-opener," says Kim McCue, director of accounting. "In the first six months we saved over $42,000 compared to sending the same wires through our bank." Discount foreign exchange trading seems to be catching on, at least with firms like UNICON.

Trading volume at privately owned Sonnet is growing at 5-20% a month, says Daniel Carmel, Sonnet's vice president of marketing. The four-year-old firm's clients include service firms, import-export firms, high technology firms and one major accounting firm.

"Companies want convenient execution: they don't want to shop for rates," contends Mr. Carmel, who compares today's discount foreign exchange market to where the discount brokerage business was 10 or 15 years ago. Sonnet arranges its trades through fewer than six FX banks, according to Mr. Carmel, and clears all wire transfers through Bank One of Columbus, OH.