Corporate clients are becoming more demanding as their FX algo usage grows and banks are responding with innovation. “The algo market is fast-moving and we’re constantly developing new tools,” says Asif Razaq, global head of FX algo execution at BNP Paribas. “Where newcomers to FX algos might be attracted by the additional control such tools offer, clients soon learn that they can ask for more. Their needs are becoming more sophisticated as they realise just how much FX algos can do for them.”
One new tool is BNP Paribas’ “feedback loop” whereby the algorithm, in effect, provides a running commentary on what it’s doing. Razaq says: “While the algorithm is executing, we want to show the clients the very same market signals that the algorithm is utilising.” BNP Paribas’ Chameleon (passive) algorithm uses nanosecond technology, says Razaq, to work out the shape and direction of the market, as well as its own execution path. Clients can “drive” their order along that path using a heat indicator to indicate liquidity plus a dial to slow the order down in an improving market or accelerate it where the market is turning adverse. “The algorithms are designed to run on autopilot, but we want to give clients the option of turning off autopilot and flying the execution themselves,” says Razaq.