Matthew, please tell us a little about what your day-to-day job involves and the responsibilities you have at Eastspring.
The primary role revolves around managing and executing trades efficiently (across different product types, in my case fixed income and foreign exchange) while ensuring compliance with internal policies and market regulations. Collaboration with portfolio managers, operations and other internal stakeholders is also key to ensure alignment of trading objectives.
What range of instruments are you generally working with?
On the fixed income front, mainly Asia credit and government bonds while on the foreign exchange front, we do a mixed of Spot/Forwards/Non-deliverable Forwards and Options.
How important are FX execution algos becoming in your trading activities and what are the main objectives when using them?
Algos remain a valuable tool for us – when employed, they allow us to execute large tickets with lower market impact and reduced signaling risk, which in turn improves overall execution efficiency.
How would you summarise some of the key benefits of utilising FX execution algos?
The key benefits of FX algos are as follows:
- Optimal pricing, minimise market impact and signalling risk.
- Liquidity: tap into multiple liquidity pools, including internalisation opportunities offered by banks.
- Adaptability: different strategies are available, allowing us to adjust speed and aggressiveness based on urgency and market conditions.
How do you go about monitoring the performance of algos and how important is the integration of pre-trade, in-flight, and post-trade analytics becoming in achieving this?
On a trade level, we use the Transaction Cost Analysis (TCA) provided by the venue which normally benchmarks the done trade against risk transfer pricing. On a higher level, we work with a third-party platform to generate reports to monitor our cost of execution and performance. Pre-trade tools are also becoming more important, as the ability to evaluate and get a glimpse of current liquidity/spreads and expect slippages is useful information when deciding which algo strategy to use.
What issues need to be considered when it comes sourcing FX execution algos and what factors might influence the decisions that have to be made here?
The quality of pre-trade analytics, in-flight execution features such as whether the algo is dynamic enough to take in current market news and suggest changes in parameters along the way. The venues that the algo plugs into are also taken into consideration e.g. internalisation of flows.
What’s your opinion about letting an algo do its work? Do you favour a hands-off approach or more real-time monitoring and the use of adaptive controls?
I believe that the best results come from adopting a hybrid approach. The technology in today’s algos is sophisticated enough that you can let them run with minimal intervention, but having human experience and intuition is still priceless and being able to come in and override or amend settings is just as important.
Data and analytics have become enormously important in FX trading. In what ways do you think more use is going to made of them to exploit the real power of algorithmic trading?
We have used analysis of past FX data as part of refining our processes. This has produced positive results for us. With smarter technology and machine learning, the possibilities are endless: the future could be anything from helping us make an informed decision before any execution to being able to predict or anticipate market trends before they happen.
Where do you think the next round of growth and development in algorithmic FX trading is likely to be focused?
I am thinking ChatGPT, but for FX. This is where the user keys in the required trade, the algo would churn out 2-3 suggested approaches, each with its own expected slippages/market impact. Banks might even take it one step further by linking each of the suggestions to an algo ticket which can automatically start an execution – the dream scenario is a seamless process for users.
What are your views about the use of next generation technologies like AI and Machine Learning in the FX dealing room and do you expect to see more use of them made?
The direction across the street is towards an uptake in the use of technology and this will continue to grow. Some believe that the role of FX dealers has shifted from executing to a supervisory role. However, a purely hands-off approach is not realistic at the current time and dealing rooms still need traders/dealers with human judgement that is gained only from experience.
In what ways is the growing use of technology and advanced toolsets like algorithmic trading likely to impact on the future skillsets required of top-class traders like yourself and how will it change the nature of the trading room environment that you are operating in?
As technology and advanced algorithmic tools become more deeply embedded in the FX workflow, the trader of the future will look less like an executor and more like a risk manager or data analyst. The future trader will need to make sense of data and tweak processes as they go along. Algos can and will handle much of the mechanics, but understanding when to intervene, how to interpret data, and how to apply human judgment becomes even more important. Soft (human) skills will remain key, including communication with portfolio managers, interpreting marker colour and discussing strategies with counterparties.
What advice would you give to firms who may be considering using FX execution algos and looking to exploit these toolsets?
Start with a review of past data, derive a data driven framework for processes. Work with banks that consistently perform well for you, assess the liquidity venues the algo routes to, and regularly monitor toxicity. Ensure you have the right infrastructure, TCA feedback loops, and vendor support to embed algos into a scalable and transparent workflow.
Eastspring recently announced a partnership with SGX FX. In what ways is this a significant step in your journey to lead digital transformation in Asia’s FX markets?
This partnership integrates SGX FX’s advanced FX workflow solutions – covering order routing, pre-trade analytics, in-flight intelligence, and post-trade transparency – into Eastspring’s existing dealing infrastructure. These tools streamline the full trade lifecycle, enabling more systematic, data-driven execution. The partnership certainly aligns with our digital transformation agenda and our shift towards real-time data, robust monitoring and dynamic decision-making.
