Two FX algo innovations 2025

The AI revolution, market fragmentation, and the buy‑versus‑build technology dilemma are just a few of the forces reshaping the FX market. In a year of relentless change, BNP Paribas’ adaptability and innovative algo trading solutions have captured the industry spotlight.

The bank’s recent partnership with Lloyds helped secure Best Platform for Algos at the inaugural Full FX Awards 2025, while its 5^th gen algo, Rex, earned the title of Best New FX Algo at the FX Markets eFX Awards 2025.

These industry advancements have supported clients as they navigate the FX markets and have helped to define the role of technology in FX execution.

“We have spent years refining our algo offering”, comments Asif Razaq, Global Head of FICC Automated Client Execution. “These accolades reflect the effort we have put into developing client-centric algo solutions and inspire us to keep innovating to help our clients succeed in the evolving FX landscape.”

How can technology support FX trading in volatile markets?

FX volatility has been a notable challenge this year as market participants attempt to navigate a turbulent environment. With geopolitical risks, volatility and market fragmentation on the rise, one question emerges: how can technology guide market participants through the ever-shifting world of foreign exchange?

The role of FX algo innovations 2025

One answer? Algos. When FX algos first emerged, their primary function was to automate order execution and mimic traders pursuing specific benchmarks. However, over the past decade, they have evolved into highly advanced tools offering a wide range of strategies to manage the complexities of FX markets.

Execution algos now represent a growing share of global spot FX volumes, particularly among buy-side participants, as demand for data-driven execution continues to rise. As FX algos become mainstream, the market has seen a proliferation of technology providers offering their own algo services.

The buy vs build dilemma

While this variety offers market participants more options, it also intensifies competition, driving down the price of using these platforms. Razaq highlights the challenges this creates for investment banks. “The collapse of algo fees makes it challenging to justify the investment required to build new proprietary FX algo platforms.”

While the fees of smaller technology vendors may seem attractive to clients, their services do not always come with the additional features offered by large banks, such as analytics tools, better pricing, and liquidity, explains Razaq.

The increased competition has led many investment banks to grapple with the question: “Should I buy, or should I build?”

When it comes to the ‘buy’ approach, traditionally, technology vendors have often been the main providers of white label products. However, for investment banks, who generally see themselves as competitors, partnerships between the two are rare.

A new type of white label partnerships

BNP Paribas has developed what it believes is a unique solution to this problem. Through a first-of-its-kind partnership with Lloyds, BNP Paribas is expanding its market-leading algo offering, Cortex iX, to new clients via a gold label solution. This collaboration allows Lloyds’ clients to utilise BNP Paribas’ leading FX algos – Chameleon, Iguana, and Viper – enabling them to execute large FX trades more efficiently while maintaining transparency and control through transaction cost analysis (TCA).

Powered by BNP Paribas

The transparent set up ensures the end user’s identity is kept anonymous to BNP Paribas. However, for the client, they have the choice to opt into using BNP Paribas’ algos, something that is absent in other white label solutions.

This means Lloyd’s clients can take advantage of industry recognised algos, powered by BNP Paribas, giving them more confidence in their algo execution.

For Lloyds, it allows them to offer an enhanced algo service to their clients without the heavy investment and time spent on building their own proprietary algos.

Internalisation: a key differentiator

A key benefit of this set up is that Lloyds’ clients can benefit from the enhanced internalisation methods developed by BNP Paribas – something other technology vendors cannot usually provide. BNP Paribas’ advanced internalisation techniques allow the bank to leverage its deep liquidity pools and provide optimised pricing to the end user client and reduce market impact.

The partnership also expands the internal matching options for BNP Paribas’ current algo users. BNP Paribas can match algo orders from both sets of clients within the same technology infrastructure, enabling BNP Paribas to facilitate ‘back-to-back’ internalisation.

As the initiative scales globally, regional client flows will converge in the same engine, fostering cross-client order matching, optimising pricing and mitigating market impact – a win-win for all participants.

By partnering with Lloyds, BNP Paribas has accelerated the adoption of its algo suite and has laid the foundation for further strategic partnerships in other regions, including the Americas, Australia, and other European markets where the bank’s presence is not as strong.

5^th gen algos for complex workflows

Rex, the bank’s latest 5^th gen algo, has also gained attention this year, winning the accolade of Best New FX Algo at the FX Markets eFX Awards 2025.

As market participants become accustomed to algo trading, their proficiency with more advanced trading solutions has risen. BNP Paribas’ latest 5^th gen algo allows its clients to execute a portfolio or basket of orders with greater efficiency than single-order solutions.

BNP Paribas noted that clients must undergo a lengthy, manual workflow process to execute a basket of orders, leading to inefficiencies and a lack of best execution.

“Our goal was to take this time-consuming complex workflow for clients and use the latest technology to automate it”, explains Razaq. By doing so, the bank’s clients can focus on more challenging tasks, with the reassurance that Rex is managing their portfolio execution.

Furthermore, the manual nature of current processes means the audit trail is often broken. BNP Paribas wanted to create a solution that allows clients to maintain an electronic audit trail from start to finish to improve overall transparency, an important regulatory requirement for clients.

 

Navigating the word of FX and beyond

In a world marked be heightened volatility and increased geopolitical risk, the demand for digital solutions continues to put pressure on investment banks to innovate. By focusing on its algo expertise, BNP Paribas continues to navigate the complex and evolving FX landscape and beyond.

In recent years, macroeconomics is a growing driver of financial market dynamics, and many market participants take a more cross-asset view than before.  BNP Paribas has expanded its FX algo offering to the listed derivatives markets with the launch of Cortex iX Listed Derivatives, unleashing Chameleon, Iguana, and Viper into this market. BNP Paribas is now also looking to expand into the rates and credit markets to offer more advanced trade execution capabilities in markets which have traditionally lacked digital innovation.

Delivering value to clients through digital solutions is key for investment banks to stay relevant in a world of digital and AI transformation.