FX algorithms have improved considerably over the past few years. We’ve gone from the tired and parochial offering of the TWAP/VWAP variants to an era of smart algos, which can replicate complex trading strategies, switch between passive and aggressive modes of execution, optimally route orders, and react to changing market conditions.
Transaction Cost Analysis (TCA) can at times be considered “more art than science”; that is largely because the complex dynamics driving shortfall are often too difficult to demonstrate through isolated metrics, tables of segmented data or individual charts. Over the years, execution brokers and independent TCA providers have developed sophisticated visualisation tools to bring patterns to life, help understand the multiple drivers of cost, and focus traders on data points and patterns that matter.
As FX market participants deal with the evolving market structure and prepare for the implementation of MiFID II, there is growing demand for more sophisticated trade analytics to improve decision-making in real-time. Joel Clark investigates.
Use of FX algorithms among the general corporate treasury community may still be in its relative nascency, yet their use among very large corporates continues to grow. But with more firms seeking ways to optimise their FX trading performance, can execution algos really becoming an indispensable tool across the board for this important buyside sector? Nicola Tavendale investigates.
