Northcape Capital Outsources FX Execution to BNP Paribas

BNP Paribas has extended its Middle Office FX (MOFX) solution to Asia-Pacific as it is appointed by Australian asset manager Northcape Capital to manage the FX execution of a range of developed market currencies across its portfolio of middle office clients.

The deal complements BNP Paribas’s existing portfolio administration and custody mandate with the asset manager. MOFX simplifies FX transactions for asset managers who interact with multiple custodian banks – typically appointed by asset owners or their clients – and have to manage different FX protocols (timing of FX execution, FX rate). It enables asset managers to execute FX transactions earlier in the trade lifecycle – at the middle office level instead of custody level – to optimise execution and enhance controls. MOFX also comes with a customisable dashboard showing a real-time view of each deal lifecycle, leading to enhanced FX reporting.

“Northcape was seeking a fully integrated foreign exchange solution that would allow for ease of settlement for their funds and mandates held with several different custodians,” explains Marie Charlotte Schmit, global head of client management, FX and passive currency overlay at BNP Paribas Securities Services. “In response, we expanded the MOFX model, a key innovation in AutoFX, which provides optimised, harmonised, transparent execution coupled with competitive FX rates and settlement across different global custodians.

“This fully automated FX solution allows the asset manager to focus on their investment strategy, knowing their FX needs and requirements are automatically taken care of,” she adds. “Foreign exchange plays a key role in executing successful trades and, as such, we are already seeing significant appetite among our buy-side clients for this new solution.”

Sean Cunningham, head of investment operations at Northcape Capital, adds, “As an investor on behalf of funds and mandates, our focus was on ensuring we were providing the best result for our clients. The efficiencies realised with this new operational infrastructure saw a reduction in FX execution lag and an added degree of transparency in the granularity of transactional data received.

“We have been pleased with the implementation of the service given it spanned multiple custodians and global locations,” he adds. “We continue to be encouraged by the results of the programme and are optimistic for its future in our operation.”