In the rapidly evolving foreign exchange (FX) market, traders and investors are increasingly seeking innovative solutions to optimise their FX algo execution. In response to this demand, BNP Paribas has launched a pioneering hybrid execution solution that bridges the gap between listed and over the counter (OTC) FX markets.
Asif Razaq, Global Head of FX Algo Execution at BNP Paribas spoke to FX Algo News about the recent development and the benefits it provides to clients.
Our client demographic is changing with an increasing number now operating multi-asset execution desks. These clients require a solution they are familiar with from our FX offering but are now able to apply it to executing FX futures as well.
Asif Razaq, Global Head of FX Algo Execution at BNP Paribas
FX algos evolving
For those unfamiliar, FX algos are sophisticated trading strategies that execute trades at the best possible price, minimising market impact and maximising liquidity. In recent years, FX algos have become increasingly popular among institutional investors and hedge funds, who require fast and efficient execution to stay ahead in the markets. BNP Paribas has been at the forefront of FX algo development, offering a range of cutting-edge strategies, including Chameleon, Viper, and Iguana, as part of its algo execution suite Cortex iX.
Initially introduced in OTC markets, these algorithms have since been adapted for futures markets, Razaq explains to FX Algo News. “Our client demographic is changing with an increasing number now operating multi-asset execution desks. These clients require a solution they are familiar with from our FX offering but are now able to apply it to executing FX futures as well.”
This move is a significant milestone, bringing intelligent execution and the advanced analytics that comes with Cortex iX to a market that has traditionally lacked digital tools. It has also unlocked the potential to bridge the gap between OTC and futures markets.
Bridging the gap
BNP Paribas has created a new hybrid execution solution that enables buyside clients to benefit from the best of both listed and OTC markets for the first time, according to Razaq.
The hybrid execution solution addresses a key challenge faced by clients who trade listed FX futures, namely limited liquidity and increased market impact. By allowing clients to submit their orders in futures notional using their existing platform, BNP Paribas’ new algo solution can source liquidity from the OTC market, providing better execution in many cases. This innovative solution offers numerous benefits, including improved liquidity, reduced market impact, and increased transparency, making it an attractive option for hedge funds and real money investors.
Asif Razaq notes, “We were able to bring this to the market because we have a strong product offering in algos for both OTC FX and futures markets. This has allowed us to bridge the gap between these markets and bring the best of both to our clients.”
BNP Paribas’ hybrid execution solution represents a significant development in listed FX trading, offering a unique solution that combines the benefits of listed and OTC markets and provides a more efficient, effective, and transparent execution method that minimises market impact and maximises liquidity.
Read the full article here and get in touch with your BNP Paribas sales representative to find out more about Cortex iX.