FX algo use on FX Connect has continued to increase significantly, resulting in a recent focus on increasing efficiency and flexibility on the platform, Smith says. This led to the recent roll out of key new features and functionality in response to client demand. The first significant development was the launch of NDF algo functionality on the platform, which is an important development given that NDFs were until recently only available as part of a single dealer offering, Smith explains.
He adds: “Part of the reason for this was the significant amount of work required to integrate with the liquidity providers in a way that is both efficient and which does not add additional risk to the users of the system. But in light of increasing demand for NDFs and emerging market currencies, we have worked in partnership with our liquidity providers to enable access to NDF algo strategies through FX Connect.” Users can now trade non deliverables using specific strategies that the different liquidity providers support, Smith says, while the team is working closely with additional banks to ensure that the maximum number of algo strategies are supported. “We are expecting to have the support of 12 liquidity providers within the year,” he adds. “Both clients and liquidity providers wanted to see this functionality become available. It has filled a gap in the multi-dealer space which was only becoming bigger as more attention turns to EM currencies.”
Automating algo use
At the same time, FX Connect has also introduced automated FX algo selection from the OMS, in what Smith describes as a significant step forward in evolving the FX algo space to catch up to what is already widely available for equity algo users. “On our platform, we scored somewhere around 250 strategies for liquidity providers and we are constantly adding new algos to the platform,” he says. “Each one of those strategies in turn has its own algo ticket that needs to be populated before it could be submitted to the bank, often with upwards of 20 parameters. Clients were losing the benefits of automation when using FX algos as a result so we wanted to focus on eliminating that complexity by simplifying their workflows.”
In what is believed to be a new market leading offering, FX Connect worked in close partnership with one of its sophisticated algo clients to build out a no-touch workflow for the platform. Buyside clients can now create rules with the OMS directly or plug in their algo wheel, creating Quick Tickets which populate the static fields for that strategy. Smith notes that any non-static, dynamic fields are provided within the Fix message itself. He adds that the most tangible benefit for buyside clients is that FX Connect will then perform all the validation required prior to submitting to the bank. “The algo space is constantly changing, so having this offering is a big step up for algo clients and ensures that everything matches seamlessly with the bank’s own single dealer platform, where clients have the ability to directly manage algo execution via the LINK application,” Smith explains.
The coming months will also see the roll out of a new basket algo offering on the platform, allowing clients to submit a multi-currency, multi-value basket of algos for the first time, adds Smith. “This ties into our over-arching theme of maximising efficiency, automation and capabilities for our algo users, while simultaneously minimising risk. That is our philosophy at FX Connect and one which continues to drive our strategy going forward,” he concludes.
