Why did Bloomberg decide to offer an analytics hosting service for algorithmic orders on FXGO?
As algorithmic trading continues to grow and becomes part of the standard execution toolkit for a broad spectrum of clients, so do the algorithmic trading strategies which are getting increasingly more sophisticated in terms of both choice of liquidity and execution behavior.
The market was looking for tools to help navigate and rationalize that complex web of algorithmic strategies to allow for more intelligent decision making prior to and during the order execution. Bloomberg’s Algo Analytics hosting service is addressing this gap by allowing providers to host their pre-trade and running order analytics to assist clients in selecting the appropriate strategy and liquidity pool right at the initiation of their order route and subsequent execution on FXGO.
What does the hosting service provide and how is it accessed?
The algorithmic order analytics service is available via FXGO’s execution manager, which is a Bloomberg Launchpad function allowing clients to manage their incoming orders and route them to liquidity providers.
The service operates via single sign-on technology and integrates Bloomberg’s FX execution tools with the liquidity provider’s own pre-trade, in-flight and post-trade data to provide immediate visibility and insights into liquidity conditions and fine tune order execution to meet the investment objective.
What key benefits can Bloomberg’s analytics framework deliver for both FX algo providers and their clients?
The service has transformed and modernized the entire client order execution experience by bringing together workflow and order management tools, algorithmic trading strategies, and proprietary analytics to create a fully integrated trading environment. In particular, clients can now compare the costs and benefits of different algo execution strategies more quickly and efficiently. This feature fits well with internal firms’ risk and compliance practices demanding clients to have very well-defined workflow steps from order entry to post-trade management. The fact that the entire workflow is a part of clients’ existing Bloomberg Launchpad experience makes it very attractive, especially as some clients continue to work from home and require efficient use of their desktop real estate.
How have your clients responded to this offering and what feedback have you had from firms that are using it?
Our customers know that analytics can be extremely powerful and help them make more intelligent trading decisions by using quantitative metrics to optimize their strategy, and we’ve had hugely positive feedback for our analytics offerings.
Previously, clients who wanted to get access to provider analytics to compare various execution strategies had to continuously switch between multiple screens with different layout and authentication requirements.
With our integrated solution, clients have expressed that they have all the required information at their fingertips which make their entire order submissions and execution process much more seamless and efficient.
Additionally, clients share that the ability to systematically incorporate pre-trade decision tools into the trading process is key in terms of demonstrating best execution required by both their investors and global regulatory framework. Analytic providers themselves also find the distribution of their tools via FXGO very straight forward and beneficial as it allows them to reach their broader client base.
In what ways do you think displaying unique intellectual property, in this case proprietary analytics, inside the FXGO platform is a good model for the future and will help you to deliver a more powerful experience for users?
As financial markets are getting increasingly more complex and the amount of relevant data and visualization tools operating on that data continues to expand and include 3rd party services, clients are looking at their platform providers such as FXGO to streamline and rationalize their experience. We will continue to leverage our in-house technology to allow for seamless integration of external services into the trading process where it benefits the client and enhances their trading experience.
Most commentators expect to see FX algo trading increase significantly over the next few years. What plans does Bloomberg have to respond to this and how will you be looking to meet the need for more trading decision support tools for investors?
In line with the industry, we observe consistent growth of algo trading both in terms of number of clients and traded volume year over the year and there is no indication of it slowing down. Bloomberg saw our user base of clients using FX algos grow 15-20% over the last year alone.
FXGO plans to continue to be on the forefront of the industry transformation and partner with algo providers to expand its instrument coverage into emerging markets, NDFs, precious metals and derivatives.
As far as decision support tools we will continue to build and integrate our composite pricing, news, analytics and cost models into all relevant trading workflows to optimize and automate trading process for our clients.