Best Algos – BNP Paribas

Differentiating in the FX algo space is tricky – banks may give their algos some great (and less than great) names, but in essence there are four or five key strategies that are run the vast majority of the time. Over the past decade increasingly bank-offered algos have started to look very similar, as have the analytics package, but throughout time, as was the case for a few years before, BNP Paribas keeps pushing the boundaries.

Two things highlight the reputation of BNP’s algos – firstly the bank itself is seeking to push them out into the wider Cortex platform, for example, to cash equities (it also offers algos in listed FX alongside OTC, as well as in fixed income); and secondly, the recently-announced agreement with Lloyds Banking Group for the latter to host BNP’s FX algos for its own client base.

The analytics remain excellent, as is the ability to run ‘what if?’ scenarios, and the bank’s decision, some five years ago, to launch Alix, its virtual assistant, and Bix, an internal ECN, have both paid off as far as the algo business is concerned. On the latter, the ability to interact with internal liquidity – while remaining screened from the principal desks – is important; on the former, users starting to investigate algos more seriously, have an assistant to help guide them through and alert them to any potential influences on their execution “in-flight”.

BNP has also released what it terms a fifth-generation algo, Rex, that takes in both the entire workflow and can execute through the legs or as a basket. It also offers relative value execution across OTC and listed, providing a notable differentiator from MDP-hosted algos. The new algo offers pre-trade analytics, execution, and post-trade allocations, splits and rolls, and also aggregates multiple orders a customer may be running, to provide more efficient execution where possible.

The secret in offering algos is not necessarily creating very complex strategies, it is about making the workflow simple and then have the technology do the complex work by optimising execution performance. This has always been how BNP’s algo business has seen the world and its popularity suggests it is right in that assumption.