Northern Trust tackles liquidity challenge for large orders with algos

John Burke
John Burke

Northern Trust has highlighted the operational burden and additional costs being incurred by the buyside as a result of significant structural changes in liquidity provision, particularly when managing large FX exposure. “Navigating this new landscape has fundamentally changed the way the buyside operates”, says John Burke, Head of eFX for Northern Trust Global Foreign Exchange. “Accessing liquidity is no longer a one dimensional process; depth of order book, natural LP internalisation and the rate of replenishment should be a consideration, as well as the provider itself following the rise of non-bank liquidity” he adds. “Trading now brings with it an onerous process to ensure good quality FX rates through extensive relationships, liquidity management and TCA review.

According to Burke, Northern Trust is able to address these issues through its algorithmic executionary solution which leverages the bank’s unique market position to access a high quality liquidity panel. “This enables clients to gain the best of both worlds – scaled liquidity access without the hassle,” he says. “Harnessing Northern Trust’s principal trading capacity, clients can access high quality, yet diverse, liquidity for their algorithmically executed trades whilst remaining anonymous.” He explains that this anonymity is particularly valued by clients for larger orders, where the leakage of client-associated trade direction information can lead to slippage.

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