2018 “began with a bang” for Currenex and FX Connect due to the implementation of MiFID II, according to David Newns, global head of Global Link Execution Services at State Street, which owns both platforms.
He adds that a “not inconsiderable amount of blood, sweat and tears” went into ensuring that the two Multilateral Trading Facilities (MTFs) that it was required to launch were up and running ahead of the January 3 deadline, an experience that was shared by many market participants in Europe last year.
While Newns declares himself to be proud of how the rollouts of those platforms went, there was no time for staff at FX Connect to rest on their laurels following the launch as they then embarked on what Newns describes as “one of the most aggressive product roadmap deployments that we’ve ever seen” over the course of 2018.
This included deploying reporting and analytics modules, establishing new functionality around the automation of trading workflows, enhancing client self-servicing capabilities and increasing integration with transaction cost analysis (TCA) tools – the last of which received a boost when it was announced in August last year that State Street would be buying BestX, a thirdparty TCA provider. On the Currenex side, upgrades were made to the liquidity management tools available on the platform in a bid to enable clients to better manage liquidity on the anonymous pools, while improvements were also made to the performance of the platform from a hardware and networking perspective.
All of these developments were pursued to help the FX Connect and Currenex platforms maintain their position in the asset management/real money and active FX trading space, but Newns also highlights areas of day-to-day operations where these platforms can distinguish themselves.
“It’s always going to be the case that you have to excel along a number of fundamental dimensions when you’re delivering an FX platform offering. So, for both Currenex and FX Connect we have to continually excel all of these: performance, stability, functionality and client service,” he says.
“Our platforms need to be fast but, more importantly, deterministic,” Newns adds. “This means that both makers and takers of liquidity need to be able to interact with the platforms and be absolutely confident that it will behave in exactly the same way every time they place an order or stream a quote.”
Similarly, having a broad array of liquidity on a platform is important, says Newns, but clients also want an extensive range of order types and a comprehensive number of ways to actually manage that liquidity.
“It’s about being able to offer anonymous and disclosed trading and then being able to actually combine those two so that firms get the best possible liquidity based upon the credit relationships they have in the marketplace. It’s about offering full amount trading as well as central limit order book trading, offering RFQ trading for unusual amounts or tenors. I think it’s important to have that broad flexibility, that range of functionality around order types and execution modalities. It might sound a little humdrum, but for us it’s very critical,” he explains.
On the service side, Newns’ emphasises the importance of having a top quality help desk available for clients 24 hours a day to deal with any technical and trading related issues they may be have. Underlying all these things, he says, is an attempt to help clients meet their compliance obligations by providing as much transparency as possible within the context of regulations and the FX Global Code.
Looking at the year ahead, there are plenty more technological improvements lined up for both the Currenex and FX Connect platforms. “A key pillar of the roadmap on the FX Connect side for 2019 is further integration with the BestX TCA service, which means providing enhancements around the granularity and the breadth of data sets that clients can access and moving into a real-time mode instead of multi-hourly updates,” says Newns. “All of those things are really important, the better the picture that clients have of their execution outcomes, the better they’re able to manage those executions in the future and the more insightful, productive conversations they’ll be able to have with their counterparties and liquidity providers.”
He adds that in 2019 there will be further enhancements around the automated order routing functionality, which Newns says will be “absolutely crucial to the way that customers are going to be managing their FX going forward” and is part of a broader push to improve the efficiency and effectiveness of execution for the real money community.
“Another focus will be answering client demands around other aspects of electronic execution: e-benchmarks, mixed givens, partial fill support and further enhancements to RFS technology on the FX Connect side and improvements around data analytics for participants on both the Currenex and FX Connect platforms. And within the context of State Street, we’ll also be exploring the opportunities that the Charles River acquisition represents in terms of front-to-back solutions for the asset management space,” says Newns.