Best execution: what role do FX algos play?

Market participants are increasingly incorporating FX algos in their best execution process, but this doesn’t mean they are the right option every time.

The use of execution algorithms in the FX market has increased significantly over recent years and it would appear that this trend is set to continue for the foreseeable future. This is partly due to the growing focus on best execution.

Under the MiFID II European directive, best execution requirements mandate firms to take all sufficient steps to obtain the best possible result for their clients, taking into account a variety of factors.

However, this is unlikely to be the only reason for the surge in interest.

Tightening up on Transaction Cost Analysis

An industry-wide focus on best execution and Transaction Cost Analysis (TCA), driven by Markets in Financial Instruments Directive II (MiFID II) and wider industry changes, should lead to a more informed buy-side.

Best execution is a well-worn concept in wholesale financial markets, and its pursuit is one of the common objectives that unites trading desks across asset classes. But with changes in market structure and regulation, as well as the increasing sophistication of asset managers and the technology available to them, best execution is a rapidly evolving discipline that is fast reshaping trading practices.

BNP Paribas partners BestX

BNP Paribas is the latest bank to partner transaction cost analysis (TCA) provider BestX to allow clients to access independent analytics to verify the quality of execution.

BestX, which aims to become the industry standard for TCA and analytics, has already signed a number of significant deals this year with banks such as HSBC and JP Morgan, as well as non-bank market-maker Citadel Securities.

Trading firms look beyond equities with new analytics tools

Trading firms are looking at new analytics tools in the foreign exchange and bond markets, as new regulations increase the pressure to prove end investors are getting the best value for money on trades.

The market-maker Citadel Securities today said it had struck up a partnership with BestX, a London-based fintech startup that provides analytics on trades conducted in the vast FX markets.

Citadel Securities Inks FX TCA Deal

Nonbank market maker Citadel Securities has partnered with startup foreign-exchange transaction cost analysis provider BestX to provide Citadel clients independent analysis of their FX trades.

“Quality execution and transparency are at the core of our client offering and partnering with BestX helps us demonstrate this,” said Kevin Kimmel, global head of eFX at Citadel Securities. “We have always supported transparency in the marketplace and view this partnership as another important step forward.”

The market maker has been raising its profile in eFX trading over the past year and more than doubled its average daily volume in 2016.

“Citadel Securities’ adoption of our FX Analytics moves BestX another significant step towards our goal of being the industry standard for FX TCA,”
Oliver Jerome,
Co-founder, BestX

Citadel Securities partners BestX for TCA

Citadel Securities has partnered third-party transaction cost analysis (TCA) provider BestX, becoming the first non-bank liquidity provider (NBLP) client of the analytics vendor, which already has JP Morgan and HSBC amongst its customers.

The US trading firm has been pushing to build out its disclosed institutional client franchise alongside its anonymous, central limit order book business this year, at the same time as client demand for independent execution analytics has grown.

BestX plans TCA expansion to liquid rates

Start-up foreign exchange analytics platform BestX is set to expand its transaction cost analysis tool in 2018 to fixed income markets, enabling participants to define and demonstrate best execution for liquid rates products in compliance with MiFID II.

The best execution firm, which was founded by former Morgan Stanley executives Pete Eggleston and Oliver Jerome, launched post-trade transaction cost analysis in September 2016 for spot FX, forwards, non-deliverable forwards and FX swaps. A pre-trade analysis tool was added at the start of this month, while TCA for vanilla FX options will be launched in the coming weeks.

BestX Goes Live with Pre-Trade Analytics Module

BestX Ltd. has strengthened its core product suite with the launch of its Pre-Trade execution analysis functionality. The new development strengthens the group’s end-to-end offering, supporting improved pre-trade analysis and netting capabilities, among other benefits.

The rollout comes less than eight months after the launch of its post-trade analysis solution. Founded in March 2016, the trading technology provider focuses on execution management with its products. The group caters to clients via comprehensive Analytics solutions to help them navigate an increasingly complex and challenging environment, especially with regard to the execution process.

BestX helps HSBC deliver transparency to their clients

“The one unchangeable certainty is that nothing is certain or unchangeable.”

Those words were uttered by former US president John F Kennedy in a State of the Union address before Congress in 1962. Nothing could be truer of today’s financial markets, where market participants across the spectrum are faced with new challenges and opportunities to reform and reshape how their business is run in order to prepare now and for the future.

Best Execution Importance, FCA’s Quest for Transparency and How to Get There

The FCA, the chief financial regulator in the UK, recently highlighted that investment managers have not been particularly engaged with assuring best Execution for their clients. With the upcoming changes to the financial regulatory framework since the beginning of 2018 and the introduction of MiFID II, companies are expected to focus more effort on the matter.

Best execution monitoring is one of the key sections of MiFID II. Companies are obligated to check the fairness of prices proposed to clients when executing orders or taking decisions to deal in OTC products.

According to the FCA, some firms have been addressing the issue and are showing 'good practice', however the bulk of the industry is trailing behind.

BestX signs JP Morgan and HSBC as TCA clients

Foreign exchange transaction cost analysis provider BestX has signed up two major dealers to provide third-party TCA for electronic and algorithmic trades to clients of both JP Morgan and HSBC via the banks' single-dealer platforms.

BestX, which was launched in March 2016 by ex-Morgan Stanley bankers Oliver Jerome and Peter Eggleston, is also understood to be on the brink of sealing similar partnership agreements with several other dealers, according to a source.

BestX wins Finance Magnates 2016 - Most Outstanding Institutional FX Product of the year award

The annual Finance Magnates London Summit 2016 has just concluded, capped off by one of the world's most anticipated and prestigious events, the Finance Magnates Awards Ceremony, which exemplifies the industry’s top performing companies for the entire year.

Finance Magnates’ CEO Michael Greenberg distributed the awards to the winners, who were chosen by industry peers as performing to the highest standard in their respective categories.

The ceremony was an exciting finale to what proved to be yet another successful Finance Magnates event. The Summit saw over 2,000 of the industry’s leading professionals and executives attend, and hosted over 90 exhibitors across the foreign exchange, binary options, and fintech realms.