The (Immediate) Future of Best Execution in FX

Nearly all investors look for opportunities wherever they might be found, and such a global view brings with it the challenges inherent in foreign exchange (FX). II recently visited with Jill Sigelbaum, Head of FXall for Refinitiv, who shared her insights on how FX trading platforms can significantly improve the preparation, execution, transparency, efficiency, and documentation of FX trades.

Why is best execution such a challenge in the FX market?

Historically, FX exposures have sometimes been an afterthought for fund managers making international equity or credit investments, and that includes insufficient consideration of how FX execution can be a potential drag on performance. Due to the OTC nature of the FX market, the sourcing of rich market data and the execution of large block trades remain pain points for the industry in a time when everyone is sensitive to minimizing market impact.

From a technology standpoint, what can fund managers, corporate treasurers, and other traders do to improve FX execution?

Moving to a single, multi-dealer FX trading platform with end-to-end workflow can help traders achieve optimum execution. Using one platform to aggregate global orders, regardless of location, can be a more efficient and cost-effective solution.

实现最佳执行是FX Traders的优先事项。这是为什么？

MIFID II通过要求投资公司采取所有足够的步骤来获得最佳执行，以便在执行订单时为客户提供最佳结果以获得最佳措施。成本压力也驾驶FX交易员来采用可以通过降低交易成本提供竞争优势的解决方案。此外，投资者正在强调他们的基金管理人员证明最佳执行和实践。

How do you define best execution?

大多数买方交易员已经寻找流动资金提供商的最优惠费用，但还有其他目标需要考虑，例如填写订单的可能性，执行延迟（延迟），市场运动风险或市场影响执行非常大的交易。强大的FX平台可以通过为交易商提供评估流动资金提供者和市场机会的数据来提供对这些不同的最佳执行目标的支持。

What does best execution for FX look like in action?

例如，公司财务主人可能会在30天内以某种货币的现金需要现金，并发送RFQ [Quote申请]，以搜索多个流动资料提供商的最佳费率。多元经销商平台可以推荐使用业务逻辑通过使用业务逻辑进行交易的最佳提供商来分析以类似RFQ的性能。另一方面，执行国际债券或股票贸易的基金经理可能希望立即将外汇风险从书上取下。制定大规模贸易的资产经理可能会寻找最深流动性的时间，以便最大限度地减少市场影响并获得最佳传播。

您之前提到的交易平台的类型有助于提高FX交易的定价吗？

Traders are likely to get better pricing when they can access multiple providers of liquidity without giving up streamlined workflow through an end-to-end platform. For instance, ourFXALL解决方案为客户提供了一个以上的180多个流动资金提供者.

平台的分析工具如何帮助贸易商实现最佳EX？

我们的FXALL平台为客户提供可操作的商业智能，例如，哪些提供商交易，一天中的时间是通过货币对提供最佳的传播，以及仪器类型和成熟 - 所有这些都有助于最佳EX。此外，我们还提供表现在货币对中的日常活动的图表，帮助客户快速视觉活动。

What about liquidity provider analysis?

Trade performance analytics [TPA] in our FXall platform allow clients to compare their results with the overall market, and the money they saved by executing with a certain provider. Users can also filter their trade data based on accounts, instruments, time zones, and other factors, to gain a granular understanding of how providers are meeting their needs. This wealth of data helps traders assess the quality of their liquidity provision in order to have informed conversations with the banks, and identify opportunities for improvement.

Are there other benefits to migrating to an end-to-end global FX platform?

Yes. First and foremost is an opportunity to reduce current transaction costs. Moving all flow to one platform, such as FXall, can result in considerable savings, depending on the scope and complexity of a trader’s current operations. Another consideration is the challenge of complying with FX trading regulations in different jurisdictions around the world. Our FXall platform helps traders address both best execution and regulatory compliance requirements that vary according to regional jurisdiction by validating whether a trade should be executed on a SEF or MTF, and channeling the trade appropriately.

最好的执行是什么，以获得最佳执行？

On the buy side, the next phase of best execution will be to use our rich data to offer pre-trade decision recommendations, such as which bank provided the best price for a certain type of FX trade. We will be investing in enhancing our FXall platform with these types of “smart” solutions for traders.

Anything else on the horizon?

我们相信FX数据透明度两种方式以及开发流动资业提供者的商业智能工具。我们的解决方案将提供具有数据的银行 - 以匿名为基础 - 所以他们可以看到他们排名的地方。例如，在特定货币对中始终如一地排列第二或三分之一的提供商可能会评估其定价，以便移动到第一编号并获得更大的市场份额。

Why is Refinitiv committed to greater transparency in the FX market?

We believe that traders, providers, and regulators all benefit from greater transparency in the fragmented global FX market. Our FXall platform can help foster a dialogue between all parties, leading to best execution of trades and greater market efficiency with streamlined post-trade and regulatory compliance.