OWL – from Crédit Agricole CIB

In what ways does the strength and experience that Crédit Agricole Corporate and Investment Bank (CACIB) has built up in FX over many years put it in a good position to meet the growing demand and interest in FX algorithmic trading strategies amongst buyside firms?

The Crédit Agricole Group is the world’s number 13 bank measured by Tier One Capital and, as the No. 1 retail bank in France, is the leading financial partner of the French economy. CACIB is therefore uniquely placed in the market, having strong connections into local markets across Europe and emerging markets globally. Our client-centric approach combined with the latest technology allow us to deliver tailored solutions that enhance client experience. By leveraging the breadth of our liquidity network and FX market expertise, our FX Algo suite is designed to optimise our clients’ FX execution. These solutions are customisable and adaptable across a range of G10 and emerging market currencies, helping clients to manage costs and efficiently access liquidity pools.

What specific benefits do your FX algo solutions provide and why are they proving increasingly popular?

The client shift towards using algos for FX execution is underpinned by several main objectives, such as lower execution costs, ability to virtually aggregate and access fundamentally fragmented liquidity pools, act in a discreet and anonymous manner and, therefore, improve the overall execution quality.

Collecting client feedback over those objectives makes apparent the diversity of approaching and achieving those objectives. For example, selecting objective market rate sets for comparison and assessment of the algo execution in a Transaction Cost Analysis (TCA) report, or having bespoke time intervals during the execution of a strategy or choosing specific liquidity pools, or switching strategies mid-flight, are all key features that can differentiate bank providers of these products in a very competitive environment. CACIB invests the required time to understand the client execution objectives and has technology that can satisfy those needs through offering a true partnership with the client with a win-win approach in mind.

In what ways do your algorithmic and TCA toolsets help clients to gain a more holistic and detailed view of their FX trading activities?

TCA originated from markets with significantly more available transaction information than FX, or indeed any OTC product. With that in mind, different TCA reports use their own base assumptions to construct an objective execution performance report. All reports though have as a prerequisite the diligent and easily retrievable storage of market ticks, and CACIB have invested carefully in this area, satisfying at the same time all relevant regulatory requirements.

Clients benefit from a very clear and objective way of looking at slippage, for example and that in turn allows them to evaluate not just the algo itself, but their overall activities against a transparent background. It also allows them to distinguish between the logic of an algo, the time of execution as represented in different liquidity patterns per currency pair and the speed/interval of order placement, as well as of course the different market performance of aggressing vs. passive strategies.