In what ways does the strength and experience that BNY Mellon 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?
BNY Mellon has been at the forefront of change in the financial world for nearly 240 years. We have weathered times of calm and crisis, and we have done it by adapting, refining and consistently improving our services. That spirit of discovery has enabled us to stay ahead of the curve and deliver consistent solutions for our clients. We are the world’s largest custodian and the singular clearer of U.S. Treasuries. This unique position in financial markets has enabled deep relationships and trust with our clients, resulting in new and improved solutions built on client feedback. Many of our clients have voiced the importance of a differentiated liquidity provision when it comes to execution algos. Additionally, many of our clients’ value BNY Mellon’s unique principal liquidity which is driven by our uncorrelated custody flows.
What specific benefits do your FX algo solutions provide and why are they proving increasingly popular?
Many of the benefits of our FX Algo solutions reside in our liquidity provision. Given our unique market position our liquidity pools offer flexibility by combining our custody, principal, and external market sources. This liquidity provision, and value added features, like the ability to auto-roll algo orders, provides clients improved execution, and reduces manual steps.
In what ways do your algorithmic and TCA toolsets help clients to gain a more holistic and detailed view of their FX trading activities?
Buy-side clients continue to demand more transparency in OTC FX. Our TCA toolsets are valuable for buyside clients in providing more transparency by benchmarking execution across several metrics. Examples of these metrics include performance against risk transfer, arrival-mid, and market impact. In our efforts to help clients with transparency we have partnered with an independent third-party TCA provider. These conversations lead to more informed conversations between the sell-side and buy-side.
Name of the Strategy – TWAP
DESCRIPTION & CAPABILITIES
A time-based algorithm that works the order during a user-specified horizon by spreading trades along a linear distribution.
EXECUTION OBJECTIVES
The strategic goal is to minimize slippage against the interval TWAP, and to achieve this by spreading the order evenly over the trading horizon. Additionally, the strategy has passive order placement logic which strives to reduce spread costs.
WHEN TO USE IT
It’s useful when a client wants to execute larger orders over a specific time period while minimizing market impact and reducing spread costs.
KEY PARAMETERS & FEATURES
This strategy will access BNY Mellon’s unique internal liquidity as well as external venues vetted for performance and market impact.
