REGIONAL e-FX PERSPECTIVE
payments platform around trade entry, authorisation and settlement instructions, have been complimented with streaming spot prices, so that more active clients can better time the transfer of funds between cross currency accounts, send wires and drafts and split payments accordingly. CIBC has invested in infrastructure to source global liquidity in an optimal way and make it available via proprietary front ends, APIs and multi-dealer platforms.”
“We provide our clients with choices,” claims Spiropoulos. He explains: “Tey can double click on streaming executable prices to trade immediately, or enter orders, or use algorithms to execute. Tey can connect to our FIX API and use our feed in their own order management and liquidity aggregation systems, or access our streaming prices via multi- dealer platforms. When they ask for prices over the phone, the sales desks can use the internal e-commerce systems for pricing and execution. When our clients place orders over the phone, our traders can use the liquidity aggregation tool to access multiple pools of liquidity to handle the risk.”
“More sophisticated clients now have the flexibility to use CIBC’s real time order management system to enter orders that go beyond simple take profits and stop losses,” says Spiropoulos. “In addition to traditional ‘if done’, ‘one cancels other’, and ‘good until’ orders, clients can utilise CIBC’s smart order routing engine for auto-execution and for minimisation of market impact using time-slicing and iceberg functionality.”
Spiropoulos continues to state that CIBC’s strategy is very much client focused, and the company attempts to provide consistent and competitive pricing to meet their needs. “Additionally, accessing and aggregating interbank liquidity to feed our streaming systems, and having the ability to auto-execute client flows using smart order routing algorithms, positions CIBC favourably with respect to regulatory developments around Swap Execution Facilities,” he claims.
The way ahead
Canadian innovation in electronic FX trading looks set to continue. Demand for e-FX amongst all client sectors is growing and this is likely to be fuelled by the need for improved STP and post trade processing linked to regulatory compliance, a desire for more effective risk management applications as well as Best execution requirements and increasing investor interest in FX as a tradeable asset class. It’s also worth pointing out that unlike some other regions of the world Canadian
68 | october 2011 e-FOREX
Takis Spiropoulos
“Not only has price discovery become more important, but in fact many clients are now mandated to receive multiple quotes (at least two) on trades. Because of this dynamic alone, business transacted via electronic systems will continue to grow.”
corporates don’t appear to have any conceptual reservations about electronic FX which might otherwise hinder continued uptake of the e-channel amongst this client segment. FX volumes generated by the more active alpha-seeking trading community are also set to increase. Multi-asset class technology has become a general trend in the professional trading world, states Evseev, who comments: “Customers are constantly in search of ways to be more net revenue efficient, while obtaining better and lower latency access to more markets from one location. Leading FX providers have the incentives to embrace this trend by feeding their prices into popular multi-asset and algorithmically capable platforms, making the FX market an easily available choice to traders who do not have access to or do not wish to use single bank platforms, high frequency algos or algos designed to auto-hedge equities-related currency exposure.”
Finally among all asset classes, OTC currency options have recently been standing out in generating buy side interest, claims Evseev. “With increasingly wide and unpredictable fluctuations in currency spot exchange rates, clients have become more aware of the benefits that non-standardised options contracts can bring in hedging the associated risks, at relatively low costs. It can be expected that more electronic platforms on the sell side will include option pricing modules and increase the sophistication of the ones that are already live.”
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