Societe Generale is a relative newcomer to the FX algo space, having been active for about two years. Since then the bank has seen a huge growth in demand across a client base that comes from the hedge fund, real-money, and corporate communities in the US and Europe. The bank has three main algos: TWAP, or an averaging algo; stealthy, named after the bird, Nightjar; and aggressive algo called Falcon. Keith Hill, global co-head of e-FX sales at Societe Generale describes it as a “streamlined” approach.
“There is a temptation out there to make a huge selection of algos with all the bells and whistles that sometimes have the tendency to confuse clients,” Hill said. “What we’ve done is added a certain amount of customization so that clients can fine tune them to get the best result.” The aim of the FX algo service, said Hill, is to continue developing flexibility to allow clients to be more hands on with execution, as well as to provide constantly refined analytics enabling them to make better decisions as to which algo to use under which market conditions.
One of the ways Societe Generale is doing this is by engaging an independent TCA provider, BestX.
The bank already offers an in-house TCA suite, which it tries to make as neutral as possible when comparing market performance. But it’s still based on internal data only. In using an independent TCA provider, clients can compare algo performance in a specific currency pair from different banks. “It’s a good statement of confidence in your algos to say we stand by what we do. We are proud of the performance, and, not only are we happy to submit it to independent verification but we use the products of that independent TCA company to monitor and tweak all our algos,” said Hill. This also answers questions like: should certain liquidity pools be excluded from different strategies in different currency pairs as a result of information leakage into the market from one data pool versus another?