Here Come Algorithmic Orders

Can you talk about the transition of forex trading from voice trading to an electronic platform?

·       In recent years, we have seen a significant shift from voice to electronic trading in FX across the world and in Asia. Financial institutions and corporations are increasingly moving to electronic platforms for the benefits it brings in terms of greater operational efficiency and increased market transparency.

·       Phone-based trading can be frustrating for both banks and their clients. For example, it takes a corporation time to call several banks for their quotes during which the market is moving. Also, although infrequent, errors can occur when the trades are independently booked by both parties. These errors may only be picked up much later in the day by back office processes. This could result in a substantial loss if the market has moved significantly.

·       Electronic trading makes the process more efficient for both sides, saving time, by allowing buyers to quickly and easily receive, compare and execute on quotes as well as providing an immediate electronic notification of the trade details to both parties.

·       Global regulations governing the FX markets in US and Europe have not had significant impacts on the Indian market as yet.

·       However, as the market develops and liberalizes and FX as an asset class increases in prominence and usage, there will be increasing requirements placed on compliance, trade reporting and central clearing which will in turn push the market toward electronic trading.

How has Bloomberg expanded its current product portfolio in FX markets since 2009, especially in developing countries-what range of clients do you now provide FX services to?

·       The products traded on Bloomberg FXGO include spot, outrights, swaps, NDFs, options, and money market instruments – deposits and Islamic deposits. We have also included support for products and instrument unique to certain countries.

·       FXGO is used by all FX market players such as corporate treasurers in organizations that face foreign exchange exposures in their businesses, large money managers, hedge funds and price-taking banks. Trades can be executed with both manual market makers and electronic liquidity providers. Through the Bloomberg terminal, we provide access to an unrivaled depth of market makers.

·       FXGO is an integrated part of the Bloomberg Professional Service. As well as execution we provide tools for pre-trade decision support in the form of our news, economic data, charts, and analytical functions.

·       FXGO supports trading in any currency pair cross. We also provide post-trade services including straight-through processing, position keeping, valuations, transaction cost analysis, and confirmation, matching & settlement. FXGO offers access to more banks, and banks have access to more potential customers–for deeper liquidity, additional flow and better pricing.

·       An increasing number of corporate treasurers are selecting Bloomberg FXGO as their platform of choice to manage foreign exchange exposures and hedge against currency fluctuations because of the tools we offer.

·       FXGO's trading functionality allows them to obtain and compare quotes from multiple sources quickly and easily, and our post-trade support allows them to manage their reporting and portfolio.

·       Corporations can also consolidate their FX trading in regional hubs which consolidate the trade requirements for numerous subsidiaries and local entities.

Clients can enter algorithmic orders through FXGO. The algorithmic orders offered are the algo orders of our liquidity provider banks and the order is sent through to the bank to manage. Clients are notified of fills to their order via FXGO so the user can track the execution of the order.

It has been observed and witnessed that you have been updating your Technology. To stay in the competitive market landscape, what services do you have in the pipeline that we can expect to see integrated to current FX platform?

We have recently released our Bloomberg FX Aggregator in India.  The Bloomberg FX Aggregator provides users with the ability to view quotes aggregated across liquidity sources or as disclosed streams, see market depth in desired block sizes, and also provides a full suite of advanced orders and algorithms. We are working on other exciting projects which we plan to release later this year.

We have witnessed growth annually. In 2015, our FXGO business grew by 36 per cent year-on-year globally, 37 per cent in Asia Pacific and 63 per cent in India.

Why do you think FX Electronic Trading has proved so popular in ASEAN regions especially in India?

·       70 per cent of the market in emerging economies is still using voice for FX trading which is significantly more than in more mature markets. Growth in e-FX will accelerate as technology providers like Bloomberg focus on solutions tailored for local market conventions.

·       The points mentioned above - compliance, operational efficiency, time-saving, trade reporting and recording, regulatory requirements - all contribute to the move toward e-trading.