A newly launched automated workflow solution helps FX traders achieve best execution mandates by securing forward points in the competition ahead of the fixing window.
- Forward FX fixings have traditionally been executed bi-laterally with little price transparency for the buy-side.
- The existing workflow meant that best execution mandates were not always efficiently met.
- Buy-side firms have traditionally used chat, phone or email to pre-agree on the most competitive forward points for fixing orders. However, these methods can be inefficient, particularly during month-end rolls.
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Bringing a new solution to market
FXall collaborated with a set of buy- and sell-side clients to agree on an automated workflow that leverages the existing workflow while solving the operational risk and regulatory concerns of the market. The new solution solves various stakeholder challenges.
- Disparate sell-side architectures meant a single workflow solution could not be delivered if multiple banks were to support the initiative. Flexible solutions were devised to accommodate partner banks’ nuanced workflows.
- Capturing and managing forward risk in advance of a trading event required an innovative approach to adjusting the risk for any underlying moves in the market at the Fix.
What is Forward First Fixing?
Forward First Fixing is an innovative and fully electronic solution allowing clients to capture competitive pricing on the forward risk component of fixing by pre-selecting the best bank price, before allocating the underlying fixing order.
- An automated, systematic way to capture the best execution on the forward risk component of a fixing order before allocating the order to a single bank.
- The ability to send, multiple fixing orders in parallel for competitive pricing using FXall’s unique multi-bank batch.
- Front-to-back STP, making it operationally efficient for both the buy- and sell-side while ensuring the risk is adjusted at the time of the fixing.
- Market risk and compliance controls are in place to offer protection to both buy- and sell-side clients.
Forward First Fixing now live
Forward First Fixing, an industry-leading advancement, went live with its first trades by a large American bank and a large European asset manager in January 2023 with multiple clients waiting to be onboarded.
The development of the new solution is a compelling example of how FXall is collaborating with both buy- and sell-side market participants to evolve the FX market structure.