State Street Rolls Out BestXecutor

State Street is rolling out the next development in its transformation of GlobalLink Digital with the integration of a new tool from its BestX unit into the FX Connect platform, that provides actionable pre-trade analytics for both RFQ/RFS trades and algo execution.

Crucially, given how sensitive the buy side, asset managers especially, is to maintaining efficiency in their workflow, the tool, BestXecutor, has been launched today (16 September), and is fully integrated into FX Connect, meaning there is no change to users’ processes – the new service become another drag and drop window in the application.

Yusuf Nurbhai, head of BestX, says the development has been driven by a desire to weaponise the firm’s TCA to augment the clients’ decision making at the point of execution, while at the same time introducing more efficiency into the process. “Client feedback on our pre-trade module was that it was good, but that it needed better inter-operability,” he explains. “Clients wanted a better, more seamless experience that was tailored to their particular circumstances.”

The answer, BestXecutor, provides the analytics to help the trading decision within the FX Connect application, meaning that inter-operability challenge has been overcome and that users are able to focus in on the performance of those counterparties that are important to them. This means, Nurbhai says, that counterparties are assessed on this performance, rather than the historical perception as may have been the case – it also provides an auditable trail to show why a user decided to go down a particular execution path or selected a particular counterparty. “BestXecutor means the decision-making process is driven by metrics and data,” he observes.

One of the notable features of the new application is the level of parametisation available. A single click opens the BestXecutor screen (or it can be embedded in the interface), and users can select the metrics that are important to them, for example spread, or the par-adjusted win rate, or market footprint and up- or down-weight them. The results can be generated from the client’s own analytics or from the BestX community data pool. “This provides a tailored execution experience,” Nurbhai says. “Different traders in different markets prefer different metrics, best execution is unique to every client. By allowing them to base their decisions around what is important to them, we are providing clients with a clear view on what the analytics are saying.

“Users are also able to adjust their metrics on-the-fly, for example if market conditions change,” he continues. “They can also create different templates for different markets, times of day, and execution style. This flexibility is important, because being able to adjust your preferences on the fly, in a user interface, helps the majority of clients. This provides more sophistication than can be achieved through an API because it provides context around what a client should be utilising to help them with their decisions. This is smart data rather than big data.”

Users can also have BestX suggest the optimal panel size (based upon research from the firm), and provides data only on white-listed counterparties on FX Connect, thus easing the selection process. As Nurbhai points out, many buy side clients have broker restrictions, but these are already set up in FX Connect. “We will only show them the analytics for those counterparties with whom they can trade for any given trade,” he explains.

“BestXecutor allows clients to make a more informed decision, at the optimal stage in their workflow”

A key factor in the development of BestXecutor was the desire to optimise how and where the BestX data and analytics are used. Greg Fortuna head of GlobalLink at State Street, stresses that while the firm is not providing advice, rather it is a “decision augmentation tool”, it is rectifying a growing issue for BestX – namely that its pre-trade TCA tool was too late in the process. “We looked at our pre-trade TCA model and it was starting after the client has made a trade decision,” he explains. “BestXecutor provides the necessary data and analytics earlier in the process and allows clients to make a more informed decision, at the optimal stage in their workflow.”

Simplicity is very much at the heart of BestXecutor, “Clients are able to learn more about the decision-making process, but they don’t have to learn a new system,” says Fortuna. “It’s very intuitive, easy to navigate, and provides the important aspects of billions of data points combined with the complexity of the quant analytics, in a way that is easy to digest. You can make these things overly complex and then people struggle to use them because they don’t have the time – simplicity is the key.”

Looking ahead, Nurbhai says BestX will continue to take feedback – “It is easier to evolve a tool that is in live production with a vast number of clients” – but clearly real-time analytics are on the horizon, as is help with deciding whether to RFS or use an algo. “The next phase is very much about helping clients with that decision,” he acknowledges. “We think we are uniquely positioned with the data set we have, and the research from our quant teams, to deliver an outstanding client experience that is available in a single sign-on environment, that does not disrupt the clients’ workflows.”

A launch feature of BestXecutor is the provision of algo selection analytics, but again, looking ahead, the firm plans to enhance this with real-time data. “When we achieve this,” Nurbhai says, “We will be providing a unified, consistent, and independent view of how a particular algo is performing. This will be an important stage in our journey as a firm, but it will also be a key step in the evolution of the wider foreign exchange market.”