State Street Global Markets has announced the launch of TruCross/FXSM, a spot FX benchmark available exclusively to the institutional buy side.
The new benchmark is designed to facilitate the matching of institutional trades to create efficiencies in electronic FX benchmark trading by reducing information leakage and volatility around benchmark pricing times.
“TruCross/FX is a timely solution to investors’ concerns around benchmark trading,” says Mark Snyder, executive vice president and head of State Street Global Markets’ sales & trading and research business. “[It] builds on State Street’s expertise in technology and trading in the FX market. Our goal is to offer our clients a solution that ultimately leads to a more transparent and efficient FX marketplace.”
Instead of the bilateral buy-side to sell-side model of benchmark order submission, TruCross/FX will have automated daily sessions at which buy and sell orders for certain currency pairs are matched and priced with reference to the selected benchmark price.
The new service will be available initially only through FX Connect, State Street’s multi-bank electronic trading system. Institutional investors can submit orders to a session ahead of a fixing with no pre-trade information leakage to the market, their trading counterparties or State Street’s principal foreign exchange trading desk.
Once the benchmark orders are matched, only the unmatched amounts are executed in the market during the period in which the benchmark is calculated utilising a proprietary algorithm. TruCross/FX will deliver the WM/Reuters mid-rate benchmark rate net of fully disclosed rate adjustments.
TruCross/FX is overseen by the agency FX unit of State Street Global Markets and is expected to be available in the third quarter of 2014.