Tech Answers The Call To Tackle FX’s Best Execution Dilemma

Over one-third of traders cite ‘best execution’ as their greatest daily trading issue according to a recent report by JP Morgan. The FX industry is looking to all aspects from, exchanges, market infrastructure providers and algorithmic trading to aid them in solving this problem.

The report entitled ‘e-trading trends for 2018 surveyed over 400 institutional traders to gain insight into what they think the main issues and trends will be in the year ahead.

ParFX

ParFX, a spot FX platform has measures in place to improve execution quality such as its unique randomized pause and enhanced trade cycle transparency. The company’s CEO Dan Marcus explained on Bloomberg TV that, “As a venue, what we’ve always tried to deliver is best execution, what you now see is there is more transparency, more surveillance, more systems, more controls, to sure we deliver the best execution that the regulators can see is traded in the market.” ParFX’s measures were put in place to remove the negative impact some high-frequency traders were having on the FX markets. By reducing this negative impact, ParFX has provided traders a fast, reliable and ultimately accurate platform where orders can be carried out efficiently.

Pragma

Traders are also looking to algorithmic trading to improve the quality of their execution. Curtis Pfeiffer, Chief Business Officer at Pragma Securities, believes the rise of algorithmic trading, which now accounts for more than one-third of flows in institutional currency markets, is due to how market prices and execution prices are databased. A database makes it simpler for their clients to carry out analysis of their execution quality and therefore improve their future decision making.

CLS

CLS is also providing tools to aide traders achieve their best execution goals, with the timely release of CLS’s FX Forecast data. This new tool provides subscribers with a forward-looking view of FX markets on an hourly basis, enabling them to quickly detect potential price movements and identify times to trade with greater liquidity, reducing market impact and signaling risk.

Alan Marquard, Chief Strategy and Development Officer at CLS, said: “Our position at the center of the global foreign exchange market means we are ideally placed to provide comprehensive and accurate data insights to market participants. Incorporating our forecast data into trading strategies can provide institutions with a better view of trading capacity, enabling them to optimize and time their trades. It also helps risk teams to more accurately adjust their models to the changing market. Ultimately, this will lead to a safer and more profitable foreign exchange market.”

Where Next? 

In a financial landscape where liquidity seems abundant, new innovative technologies are aiding traders to maximize best execution, however, it remains to be seen whether this will address what is now the biggest concern facing traders today.

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