JP Morgan has added functionality to its algo suite that allows clients to book foreign exchange forwards. Known as a spot contingent forward order, the tool is effectively an add-on to a spot algorithm, whereby users would pre-set a forward date and then the algo would automatically roll forward after it has executed.
“We’re seeing significant demand for this type of functionality and we expect that to grow as we extend the distribution in the coming months to make it accessible through multi-bank channels as well as our own platform,” says Richard James, head of currencies and emerging markets execution services at JP Morgan.While the functionality of rolling an algo forward is not technologically complex, the booking and credit checking processes are more challenging and James believes only a small number of banks are currently offering this kind of strategy.
“I don’t believe there are many other ways to execute forwards algorithmically, but its success depends on having strong spot execution and then being able to roll the contract efficiently,” says James. The spot contingent order can now be applied to all of the algos within JP Morgan’s suite. The bank recently launched a new algo known as ‘internal tracker’, which executes against internal flows without creating a footprint in the external market.