As global foreign exchange markets evolve and desks look to enhance trade execution, data and workflow management are fundamental to investments to achieve this goal, says the Greenwich Coalition.
Investments are being made with efficiency in mind and ambitious targets are being set across the market. The study found that of the top five overall investment priorities for FX desks, three are related to data themes and two are related to workflow.
Regarding data considerations, 62 respondents said “improved execution management and analysis” is a top priority for foreign exchange investing, with 40 of those surveyed citing “enhanced data capture and analysis.” 36 people specifically pointed to “improved pre-trade analysis.” .
From an operational perspective, “optimizing workflows” is also a key priority, with 49 respondents highlighting “optimizing pre- and post-trade workflows” as their main priority. 45 of them emphasized “improving post-trade processes.”
The report highlights the connections between these two areas and explains: Without a systematic workflow, it’s difficult to actually capture data. ”
The market structure is constantly evolving, and the environment surrounding FX is changing significantly.
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Regarding the main trends affecting the structure of the foreign exchange market, the report pinpoints the “increasing cost of credit access”, with 59% of respondents agreeing that it is a significant change. This was closely followed by “increased digitalization of trade execution” and “changes in the provision of credit by banks,” with 58% of respondents highlighting each of these factors as a top trend.
The increased use of cleared currency derivatives was also an important consideration for 37% of respondents. “For the buy-side, the ability to calculate the cost difference between executing cleared and non-cleared FX derivatives can impact portfolio performance,” Coalition Greenwich argued in a statement. .
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Stephen Bruell, Senior Analyst, Market Structure and Technology, Coalition Greenwich. […] Fundamental to that effort is the ability to effectively capture, process, and analyze data. ”
According to the survey, approximately 57% of FX professionals surveyed agreed that their data management efforts in FX execution need improvement, and 42% said their company’s data program is in need of improvement. He said it was effective.
Digging deeper, 24% of respondents said their pre-trade analysis programs were not effective, while 35% thought they were effective. As these analyzes permeate trade execution decisions, we believe that potential flaws can impact the entire trade.
“For customers conducting FX trades and the brokers that facilitate those trades, the ability to minimize credit costs, capital costs, and margin costs is enabled by data. Both pre-trade and post-trade data ,” the Greenwich Coalition said.
Coalition Greenwich’s recent survey includes responses from more than 120 senior currency professionals from around the world.