Cloud-based order and execution management system (OEMS) provider Tora, has announced the release of its new FX auto-hedging function for equity pairs trading.
The new solution sits within the firm’s equity pairs trading algo suite and offers automatic hedging for clients’ cross currency equity pairs and equity derivatives trading. It captures all transactional information on the pairs orders within the Tora OEMS and gives the trading desk a single holistic view of all activity. The multi-region pairs algo suite is available natively in the Tora OEMS and clients can manage the risk on pairs orders with levels of granularity and control, in a variety of ways, aggression levels and execution styles.
The firm says the release will help risk arb desks where managing FX exposure is essential to performance, and where traditionally, multi-currency spread orders have been managed using specialised algos in one system, and another separate system to manage the corresponding FX risk. Using several different applications and/or spreadsheets can be incredibly time consuming for the trader to calculate, maintain and update several times throughout the trading day, the firm says, adding it can also result in imperfect FX hedging and, in certain scenarios, poses operational risk of significant mis-hedging.
“The new functionality will enable superior operational efficiency by helping risk arb traders to easily currency hedge their pairs trading in one completely automated system,” says Robert Dykes, CEO of Tora.
Ovidiu Campean, global head of product at Tora, adds, “We made the new solution incredibly easy to use. All the trader needs to do is select the FX base currency and counterparty from an intuitive dashboard. As the equity orders begin to fill, the algo calculates the live FX exposure and creates orders to maintain the FX hedge. An added benefit of the solution is that the trader is not tied to executing the FX hedging orders with the same broker as the equity orders.”