FX in Focus – The Path to Automation Utopia

A combination of compressed margins, the need for increased efficiency, and the impact of COVID has catapulted automation to the top of the agenda for FX trading heads. Using technology to improve order processes, workflows and execution standards while reducing human error is a huge driver on the buy side, motivating institutions to step-up their pursuit towards a more automated FX flow.

As such, buy side firms are either looking to incorporate automation on the desk by starting on smaller, repeatable spot trades; or they are looking to take automation beyond spot by addressing the data, infrastructure and liquidity challenges for swaps, NDFs, outright forwards and options. At recent meetings within The Finance Hive, the buy side have made one thing very clear: automation is a strategic necessity for FX.

Informed by on-the-record interviews, polls and a roundtable discussion with a group of North American FX heads – hosted under Chatham House Rule – this report covers:

• Automation as defined by the group
• Overcoming the top 3 roadblocks to automation
• The crucial building blocks needed to achieve your long-term goals
• The critical controls and rules required
• Measuring success through quantifiable and operational benefits
• Moving beyond spot automation
• Balancing the maintenance of counterparty relationships with automating vanilla order requirements

Analytics and data are crucial, not only for safety checks such as pricing tolerance, but also, to optimize execution decisions. By the time you employ data in these higher-order decisions, the moment to begin collecting data has long since passed.”

VP, FX Electronic Trading & Market Structure Analyst, T. Rowe Price