FX Connect is part of State Street’s GlobalLink suite of e-trading platforms, technology and workflow solutions. What sort of clients are now utilising the platform?
FX Connect is the market-leading FX execution venue that helps asset managers efficiently manage multiple portfolios, connect with liquidity providers and streamline global FX operations. Our clients in the asset management community have told us they need help to expand their technical capabilities to meet new market conditions and regulatory requirements, and the FX Connect team works hard to ensure our service can meet those needs.
FX Connect is the only platform that can demonstrate a 20+ year track record of tailor- made solutions for institutional investors. How important has client feedback been in helping you engineer and shape the evolution of the platform?
We spend a lot of time visiting clients, holding user groups and developing long-term relationships with our users. This means FX Connect has stayed completely laser-focused on the needs of our core client base while many eFX platforms have been caught-up in mergers and acquisitions. In today’s highly competitive environment where firms face increased complexity and regulatory demands, it’s vital that we work with our clients to shape our product and solution strategy.
We also work closely with our 65+ sell-side liquidity providers across the globe who provide coverage across a myriad of execution styles, inclusive of over 200 algorithmic strategies. Over the past 12 months we have rolled out an extensive list of product enhancements and have ambitious product plans for 2020 and beyond. The considerable investment that we are making in these product enhancements demonstrates our commitment to our clients.
In what key ways does FX Connect help to overcome many of the FX workflow challenges facing buyside firms?
FX Connect has developed key partnerships with third party service providers and related services from GlobalLink, State Street’s suite of e-trading platforms, technology, data and workflow solutions. Combined, we provide powerful workflow solutions to help the buy-side automate their workflow. For example, we provide seamless integration to several third-party transaction cost analysis (TCA) specialists including BestX, Elkins McSherry and other TCA providers.
This allows us to provide tailored solutions for our clients’ specific needs when measuring TCA. FX Connect provides reporting to monitor all trading activity. We also support a variety of execution modes including bank algo, request for stream (RFS), slice trading and competitive request for quote (RFQ). And finally, integration with our post-trade product, TradeNeXus (formerly Trade Services™), provides for certainty in settlement with real-time trade matching, confirmation, and messaging. TradeNeXus recently announced partnerships with CLS, to provide an integrated view of CLS Monitor for tracking CLS settlement activity across all accounts and with LCH ForexClear, to offer FX clearing connectivity and workflow, beginning with non-deliverable forwards (NDF). Being innovative with our alliances has allowed us to drive an increasingly efficient end-to-end FX execution and settlement platform.
Please give us a brief overview of the range of execution capabilities that are available with FX Connect.
FX Connect characterizes execution capabilities into three categories; high and low-touch, and increasingly, no-touch execution. Low-touch orders are comprised of simple RFQ style executions or benchmark sessions for example. High-touch orders may involve a heavy dependency on relationship-based trading, algorithmic execution or any block trade broken into child orders predicated on changes in market conditions, urgency or implementation shortfall objectives.
Earlier this year we released our new automated order router (AOR) function which allows the buy-side to streamline their current execution process. AOR allows for rules-based trading for Request for Stream (RFS) sessions. Buy-side firms can establish a rule set inclusive of defined attributes which will determine the submission and/or acceptance of orders with minimal human involvement.
This powerful new tool is fully customisable and allows client firms to choose how to execute their trades. It will make a client’s FX trading more efficient, more transparent and adds value to the investment decision making process.
How much execution flexibility does FX Connect offer in terms of supporting various trading styles and strategies?
FX Connect has comprehensive execution capabilities. Clients are able to transact spot, forward and swap trades across multiple counterparties. The system supports numerous trading styles and strategies, including:
- Algo Trading
- Allocation (including straight-through processing)
- Basket Competitive Trading (CP)
- Benchmark CP
- Benchmark trading
- Competitive trading
- Portfolio trading
- RFS trading
- RFS multi-value date trading
- Swap Execution Facility (SEF) trading
- Slice trading
We also provide a unique cross-currency netting functionality, which is one of the most effective execution methods for many of our asset management clients. It facilitates efficient and more cost-effective portfolio trading of up to 5000 allocations through its ability to provide portfolio pricing on a netted basis. This functionality can have substantial impact on reducing portfolio cost, with minimal information distributed to the market.
Please tell us more about TradeNeXus. Is this a new service?
FX Connect is part of GlobalLink, State Street’s suite of e-trading platforms, technology, data and workflow solutions. TradeNeXusSM (previously known as Trade ServicesSM) has been rebranded as a result of our plans to expand the reach of the platform beyond FX matching, confirmation and messaging.
We plan to leverage the existing core functionality and broaden the services offered.
TradeNeXus recently announced a partnership with LCH ForexClear, which provides users of TradeNeXus with easy access to LCH’s clearing service, while retaining the familiarity and functionality of its existing bilateral services. Additional partnerships are being worked on with CLS, to provide the CLS Monitor service within TradeNeXus, and other post-trade providers to broaden TradeNeXus client solutions.
Given that FX Connect and TradeNeXus are so tightly integrated, FX Connect’s users will benefit greatly from these new developments.
What array of tools and functionality does FX Connect provide to support best practices and risk management activities?
As a signatory to the FX Global Code, and a trusted partner for over 600 asset managers globally, FX Connect creates an ecosystem that assists all of its clients, buy-side and sell-side alike, to adhere to the six leading Global Code principles: ethics, governance, execution, information sharing, confirmation & settlement, as well as risk management & compliance. From pre-trade to post-trade, execution and TCA analytics, and finally to settlement, FX Connect provides all the tools essential to “promoting the integrity and effective functioning of the wholesale foreign exchange market.”
Earlier this year you enhanced still further the award-winning technology that underpins the platform. Please tell us a little more about that and in what ways these improvements now help you to provide a more agile and innovative platform for clients?
In addition to the Automated Order Router (AOR) functionality already mentioned, FX Connect’s range of 2019 enhancements includes:
- FX Connect Web migration: Through a complete transformation using HTML5, FX Connect is creating a trading ‘cockpit’ that provides order management and execution through a single, secure interface.
- FX Connect Order Blotter. Developments include live indicative rates, the estimated percentage away from an order’s limit price, colour coding of orders based on their percent away from their custom threshold settings and customisable order alerts.
- Partial Executions will provide buy-side users with fully flexible execution capabilities all within an algo sessions. Users will be able to stop an algo at any point and either cancel the remaining balance (freeing up the remaining amount of each allocation) or to continue trading the remaining amounts of each individual allocation using any execution style with any liquidity provider.
- RFS Mixed Givens will allow buy-side users to block orders of same currency pair with different given currencies and trade them as a single RFS session providing quicker execution times and further netting benefits.
FX Connect is now integrated with BestX®, the market leading FX and FI Best Execution analytics platform. What benefits does this provide and how have you been working to increase the granularity of the TCA data that clients can now get access to?
We have approached integration with BestX in a phased plan to allow FX Connect clients to benefit from easy access to the industry-leading provider of TCA which helps clients achieve greater transparency in their FX trading and demonstrate best execution. We now jointly provide a rich set of features and data for clients including:
- FX Connect users are able to use single sign-on authentication to gain access to BestX pre and post-trade TCA analytics.
- Clients can upload pre-submitted orders to BestX to perform pre-trade analysis to assist with execution decision making.
- Users have access to a summary Transaction Cost Analysis report based on their FX Connect trading data.
FX Connect recently won yet another award and was named Best FX Platform for Asset Managers. Looking ahead what plans do you have for the platform to ensure that it continues to excel in performance, stability, functionality and client service?
FX Connect’s long term plans are to create an infrastructure that supports any style of execution, any venue preferences and any client type, from pre-trade to post-trade. FX Connect’s planned move to a web-enabled service will enable a tighter integration with any OMS provider and immediate client benefits are already being realized from the Charles River Development/FX Connect relationship.
Furthermore, FX Connect will be well positioned to marry unfettered execution strategies alongside real-time TCA with pre/in-flight analytics. Powered by BestX, this synthesis of execution and data analytics will maximize trading opportunities while minimizing opportunity costs and information leakage across the execution timeline.
Fulfilling best execution principles, enhancements within the TradeNexus platform will allow seamless clearing integration with LCH ForexClear, a multinational central counterparty.