A number of foreign exchange (FX) prime brokers have partnered with widely used platforms in an effort to reduce risk factors in algorithmic and high-intensity FX trading.
Traiana, Deutsche Bank, Citi, JP Morgan and Morgan Stanley today launched an initiative developed in conjunction with Bloomberg Tradebook, Currenex, Thomson Reuters, EBS, FXCM and Hotspot FX, which aims to centralize the management and monitoring of electronic communication network (ECN) trading limits and activity on a global scale.
Deutsche Bank was the first to implement the updated Harmony CreditLink service, now available to all Harmony subscribers. The platform will allow users to monitor credit risk for their clients on a real-time basis across multiple ECNs, from a single dashboard interface, as well as manage credit lines to maximize investment while maintaining a view to minimizing risk. The prime broker will, on notification of limit breach, be able to modify or terminate transactions with immediate effect.
"The increase in high-frequency and algorithmic FX trading has made the provision of adequate control and real-time risk management of critical importance," says Michael Irwin, co-head of FXPB at Morgan Stanley.
Andrew Coyne, Head of FX Prime and G10 e-commerce at Citi also highlights his view of the initiative's importance: "This collaborative industry initiative addresses a fundamental and immediate industry need - that of providing trading and limit management to prime brokers to enable them to monitor their clients' credit risk in real-time. Initiated independently of any regulatory call for change, this new solution will fundamentally change the way the FX industry operates going forward," he says.
Adam Sussman joins Anthony Malakian to talk about Liquidnet's acquisition of OTAS, machine learning and AI, and what the buy side wants from analytics platforms.Subscribe to Weekly Wrap emails