Russell Investments has launched RFX Network, a platform that allows plan sponsors and asset managers to manage their fiduciary responsibilities involving foreign exchange executions that historically have been costly to trade and difficult to evaluate. The platform, which is powered by technology from Integral Development Corp., enables institutional investors to transact benchmark orders and improve execution at fixing times.

“We wanted to create a platform where we can bring the investment community together so that they can more efficiently execute their foreign exchange trades,” Joe Hoffman, director of equity derivatives and foreign exchange at Russell Investments, told Markets Media. “Our primary goal is to allow people to match trades in the market and also efficiently execute any individual amount.”

RFX Network allows buy-side firms to automate execution of complex trade lists by combining internal netting within an investor’s trading portfolio with external matching among the larger buy-side community, according to a release.

The platform is intended to help clients with managing their trades, assessing the costs and demonstrating best execution to their clients and to their investment boards. Fixing orders are matched with other investors, while any unmatched residual is executed by a trading algorithm that mimics the Fixing process to minimize tracking error.

“We’re looking for electronic trading systems to help clients achieve best execution and have the means to verify that with time stamps and also transaction cost analysis,” said Michael DuCharme, head of currency strategy at Russell Investments.

For asset managers, by whom FX trades are often used to hedge currency risk on equity trades, the ability to perform TCA is complicated by the principal trading model, whereby “buy side traders face off against market professionals who are trading for their own accounts and there’s a profit motive there that’s inspired by that principal model,” said DuCharme. “We’re looking at bringing the buy side together so that they can trade in more of a protected environment.”

Integral Development Corp. operates FX Grid, a trading network connecting market participants with major sources of FX liquidity. Its business model enables FX market participants to build their own private FX exchanges, and to deliver branded trading services to their clients.

“Everyone is aware of the challenges our industry has faced the past year with regard to Fixing,” said Harpal Sandhu, CEO of Integral Development Corp. in a release. “Combining Russell Investment’s deep understanding of FX markets with Integral’s technology results in a fair, transparent, and efficient way for the buy-side to execute complex trade lists and reduce Fixing-related risk.”

Featured image via COSPV/Dollar Photo Club