Prior to full launch, BNP Paribas is beta testing a pre-trade tool with a handful of clients. The as yet un-named transaction cost analysis (TCA) engine will enable clients to examine a wide range of FX execution methods and make a well-informed choice from the many options open to them.
“What we have effectively done is built a financial services GPS platform,” says Asif Razaq head of FX algo execution and FX direct market access. “Like using Tom Tom or Google Maps, the client wants to get from one place to another and provide their route criteria. Our tool will help them find the best way to get to their destination. What we are doing, in real time, is assessing volatility conditions and liquidity conditions and based on these we will map out an optimal path to enable the client to trade most effectively.” The TCA tool is interactive so that the client will be able to drag and drop a particular execution algo onto the dynamic workspace and be able to judge which is the best one to choose.
“This is a cutting edge tool,” Razaq says. “We are effectively acting as independent liquidity consultants to our clients. We are giving them an impartial view of the optimal way to execute their FX trade.” The bank expects a full roll out of this service before the end of the year.