What are the most important trends you are currently seeing in the FX algo space?
We have witnessed an increasingly more sophisticated approach from our clients to the entire algorithmic order workflow, from pre-trade provider and algo strategy selection, demand for in-flight strategy and parameters adjustments, through to post-trade data analysis.
The process does not stop there, with post-trade data now feeding into the pre-trade provider and strategy selection process. This forms a complete data-driven execution cycle, allowing clients to have a quantitative way to demonstrate best execution to their investors. In turn, the fact that the entire algorithmic execution process is becoming more understood has also opened the door to additional client segments, including mid-tier asset managers and corporations.
Why is Bloomberg best positioned to respond to these changes?
The two essential requirements from sophisticated clients utilising algorithmic execution are full straight through integration with trade life cycle and a provider neutral way of analysing and benchmarking resulting executions. As a multi-bank platform integrated into the Bloomberg Terminal, we are able to meet those needs.
Specifically, our execution management tools allow clients to bring their orders in, optimise them, route, allocate and subsequently automate back-office confirmation and settlement processes. As many of our clients trade other asset classes in addition to FX, the fact that the majority of our execution management and trade analysis tools are cross asset is very well received by clients. Finally, integration with Bloomberg Terminal allows FXGO clients to also utilize Bloomberg composite pricing, news, and analytics directly in their execution process.
Please share the details of any recent new features or toolsets which you have recently released.
We continue to invest in our trading workflow tools to both respond to client needs and offer innovative forward-looking solutions. As such, we released an ability to slice large orders and route partially to both provider algo strategies, or trade based on risk transfer price. To allow clients to adjust their order in-flight to meet prescribed execution time horizon we partnered with algo providers to offer strategy amends, allowing the client to start with a passive strategy and then gradually re-adjust to more aggressive ones as required, all as a part of the single ticket. Finally, we have also released integrated analytics which enable clients to bank specific analytics within the context of their FXGO routes.
What is the direction of travel for Bloomberg’s FX algo offering and that of the FX algo community in general?
Investment in algo execution is going to continue to remain the priority for us, as per the request of our clients. The main areas of focus for us include expanding the instrument set offered by algos outside of traditional FX spot into FX derivatives and precious metals, enhancing execution tools to increase trader efficiency while managing multiple large orders and further augmenting pre-trade and post-trade analytics tools to improve the decision making process.
We also expect developments on the regulatory front to positively affect algo adoption as they bring more transparency via behavioural disclosures and enable algo provider consistency. In addition, as volatility returns to markets due to the recent geopolitical events affecting liquidity, more clients are likely to turn to algos as an effective execution tool under those conditions. Finally, as instruments beyond FX spot are increasingly becoming more electronic from both a pricing and hedging perspective, we expect algo development and usage will play an important role in meeting this increased demand.