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FX: in the age of the algos tailor them to fit your needs

For many decades Northern Trust have been offering a suite of FX services which included:

  • Complete FXTM, their outsourced end-to-end FX dealing service
  • Passive currency overlay services, including:
    • Portfolio hedging
    • Share class hedging
  • Restricted currency trading
  • Standing instructions, automated income sweeps and custody trade tagging
  • Voice trading via global dealing desks in Chicago, London and Singapore.

To this suite they have added: FX Algo Suite, offering tailorable, automated trading solutions.

FX Algo Suite and the liquidity panel

The FX Algo Suite gives clients more flexibility in how their orders are placed and allows them to access competitive pricing through Northern Trust’s liquidity panel. The liquidity panel aggregates pricing from a list of leading liquidity providers across the globe, while the custom execution algorithms allow clients to minimize market impact on large orders and utilize a systematic, rules-based process to offset their FX risk.

“The real power of FX Algo Suite lies in Northern Trust's liquidity panel,” said Timothy Linehan, Senior Partner, Silchester International Investors. “We have seen competitive quotes and narrower spreads without a corresponding increase in counterparty exposure, balance sheet risk or operating complexity for Silchester and its clients.”

Transaction reporting

Northern Trust’s transaction reporting provides clients with a clear view into how their orders are handled. They claim that this post-trade execution analysis, coupled with a transparent and explicit fee, allows clients to gain a more holistic and detailed view of their FX program.

“Clients want to be able to minimize uncertainty in their foreign exchange transactions, and Northern Trust is committed to helping them do that,” said Pete Cherecwich, president of Corporate & Institutional Services at Northern Trust. “By giving them the tools to manage their exposure, we have made foreign exchange dealing more efficient and transparent for our clients.”

CTMfile take: Algos can be really powerful, but tailoring them to fit each corporate’s evolving needs is the key to real FX savings and transparency.

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