Nordea is launching a suite of six FX algo strategies this summer. Scandinavian institutions, said Kasper Folke, Nordea’s head of e-FX, have increasingly moved away from principal risk transfer towards execution algos. “Some clients are using algos to find new ways of proving best execution, while other clients utilize algos as a means to improve execution quality and reduce the overall cost of trading FX,” he said. Nordea’s FX algo customers tend to be large institutions – pension and insurance funds as well as asset managers. But the largest corporates are also on the radar. What they have in common is that they prefer to use FX algos optimised for Scandinavian markets, leveraging on Nordea’s unique liquidity.
One of Nordea’s FX algos, named Make, for example, is a passive liquidity providing algorithm that will never cross the mid-point of the spread. “We have all the necessary algos from passive to aggressive,” Folke said. “Most Scandinavian clients have the highest interest in benchmark-oriented algos like TWAP or VWAP. The demand is for an easy access to a suite of algos, with the ability to customise a few of the parameters.”
Looking at medium and small corporates, Folke noted that there is preference to hedge as a principal risk transfer. One of the reasons for that is that such clients are focused more on non-FX related hedging strategies. “It depends on how advanced the corporate treasury function is, and if they have in-house knowledge, and significant flows,” explained Folke.
See more information about Nordea on page 28.