TradeNexus, Capitolis, Link Up for FX Optimisation
Posted by Colin Lambert. Last updated: August 9, 2023
With The Full FX View
State Street Global Link’s TradeNexus has partnered with optimisation provider Capitolis to launch an automated post-trade solution to optimise portfolios, the partnership was first announced in late 2021.
The partnership will allow buy-side firms to utilise TradeNexus to automate data submission and access Capitolis’ analytics tools to regularly scan portfolios for opportunities to optimise FX trades. They can further drill down opportunities for further analysis using a dashboard and single-sign-on function between the platforms.
Firms can then decide which optimisation opportunities to pursue using Capitolis’ technology based on the expected savings and initiate those optimisations, and all parties to any optimisation cycle can benefit from the straight-through-processing to gain capital, margin and/or operational efficiencies.
The Full FX View
This could be a significant partnership for asset managers in particular in the FX industry. With regulation capturing an increasing number of firms in its grasp, capital optimisation – largely seen previously as something for banks – suddenly becomes a bigger issue for the buy side.
With anecdotal evidence from surveys indicating that the buy side is holding more risk in today’s financial markets, compared to the banks, this roll out could be very timely. Asset managers in particular have started looking more seriously at how they execute their FX trades and are spreading their business wider, meaning opportunities for optimisation across their panel of banks would have potentially serious value – not to mention any peer-to-peer trades.
This could be the first of several similar partnerships in the industry, where post-trade solutions connect to sources of optimisation. Capital efficiency is only going to become a bigger challenge for FX market participants and the solution is likely to come in the form of cross-firm collaboration such as this, rather than in a one-stop-shop approach that can exclude too many potential beneficiaries.
“In today’s foreign exchange market, financial institutions are feeling more pressure than ever to optimize portfolios, mitigate risk, and contain operational and processing costs,” says Kate Lowe, co-head of GlobalLink FX. “Our clients require seamless and ongoing post-trade optimisation services, and together with Capitolis, we have created a next-generation, best-in-class offering that will allow them to stay truly competitive in this evolving environment.”
Gil Mandelzis, CEO of Capitolis, adds, “Our collaboration with TradeNexus is an ideal blend of innovative technology and unparalleled connectivity within the buy-side community, and it will become a critical differentiator in helping these institutions optimise their workflows and post-trade processes.”