Northern Trust to Add Algo Execution to CompleteFX
Northern Trust plans to increase the dealing capabilities of its delegated foreign exchange processing service, CompleteFX, later this year.
“Clients are showing interest in moving beyond things like third-party published rates,” said John Turney, senior vice president and head of CompleteFX at Northern Trust. “It’s matching up our capabilities to address that interest versus going and trying to do something radical. That speaks to a real advancement in terms of execution capability over traditional methods of passive order flow.”
Some of the planned features include optional algorithmic-order execution, request for streaming quotes, and request-for-quote dealing capabilities on passive trade order flow.
“We’re going to be delivering these capabilities to clients by integrating our workflow with some of the tools that we have on the dealing desks,” he said.
Meanwhile, Northern Trust also is working on improving CompleteFX’s middle- and back-office support with better straight-through processing (STP) and exception management capabilities.
CompleteFX, which Northern Trust offers as part of its Global Funds Service business or as an à la carte service, offers clients a way to send FX order to Northern Trust, which will be executed using the financial services firm’s middle and back office under a governance structure jointly developed by the client and Northern Trust.
After the FX trade, Northern Trust also provides the settlement, notification to third-parties, transaction reporting that clients can load into their accounting systems to get an updated picture of cash resulting from their FX transactions.
The offering targets the investment managers for whom foreign exchange is something of a cash management function, Turney added. “As soon as foreign exchange is not a source of alpha, it becomes somewhat of an asymmetrical scenario for investment managers,” Turney added. “There’s certainly plenty of downside through operational errors or poor execution.”
Featured image by Dmitry Nikolaev/Dollar Photo Club
Electronification of the municipal bond market also presents a large opportunity.
The success of Northbound trading showed electronic execution is way forward for the bond market.
Algorithms have become more prevalent in the spot FX market.
Increased electronification has created useable and accessible real-time and historic trade data.
Buy-side firms can discover liquidity more efficiently and execute on Turquoise.