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Taking a closer look at Segregated Execution

June 2023 in Previous Features

In recent years it has become increasingly important for banks to safeguard their client’s trading information using segregated execution desks. This is becoming a best-practice model as it provides a way to reduce potential or perceived conflicts of interest within FX trading businesses.  Having run a segregated execution desk, and spoken to traders on other segregated desks, I find there are usually differences in how procedures and policies are implemented. This article will explore some of these.  In order to do this, we loosely refer to an FX segregated execution desk as a trading desk which manages execution of FX orders without information slippage or taking principal positions. Information slippage, in this context, is where internal or external traders become aware of an order without being a counterparty to it.

Why are segregated execution desks needed? Although segregated execution desks are not new in FX, we have recently seen more formalised segregation pressure in response to changes in how banks manage fixing and/or algo orders.  This has resulted in segregated execution desks interacting with clients more like an agency execution desk in futures or equities, enabling them to provide market colour as well as discussing different execution scenarios with clients. There is a natural similarity between the handling of algo Why are segregated execution desks needed? Although segregated execution desks are not new in FX, we have recently seen more formalised segregation pressure in response to changes in how banks manage fixing and/or algo orders.  This has resulted in segregated execution desks interacting with clients more like an agency execution desk in futures or equities, enabling them to provide market colour as well as discussing different execution scenarios with clients. There is a natural similarity between the handling of algo

Why are segregated execution desks needed? Although segregated execution desks are not new in FX, we have recently seen more formalised segregation pressure in response to changes in how banks manage fixing and/or algo orders.  This has resulted in segregated execution desks interacting with clients more like an agency execution desk in futures or equities, enabling them to provide market colour as well as discussing different execution scenarios with clients. There is a natural similarity between the handling of algo

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