e-FX Awards 2020: Best trading software for FX – FactSet

Data and technology solutions provider FactSet offers a data-driven approach to automated trading, propelling asset management clients towards automated trade executions based on real-time analytics – a scenario the firm’s head of FX trading services, Christopher Matsko, labels the “enlightened workflow”

Trade automation is becoming increasingly prevalent in FX. And the boundaries of workflow processes are continually being pushed towards integrating real-time analytics into market participants’ FX trading software as a way to optimise their trade executions and allocations in tune with live market conditions.

This new frontier in the automation of FX trade workflows is at the heart of data and technology solutions provider FactSet’s strategic approach in designing software that will allow its global tier-one asset management clients to automate their trade executions based on real-time analytics rather than merely historical data.      

This is what Christopher Matsko, head of FX trading services at FactSet, calls the “enlightened workflow”.

“This is what we are driving towards – that’s our goal. We’re looking to accomplish real-time trade automation as seamlessly as possible for all of our clients,” he explains. “Our automation toolkit has always been part of our technological edge. It’s extremely customisable and allows orders to be routed in a number of ways based completely on client-driven requests. We now want to take the next step towards a data-driven pre-trade analysis approach.”

While the fundamental pieces of this puzzle are by no means novel, Matsko explains that they are currently dispersed among a plethora of different vendors and locations with no-one yet having been able to bring all these pieces together into a single comprehensive package.

And, because bringing the different components of this enlightened workflow into a seamless whole is a monumental undertaking, FactSet has opted to create the building blocks of this optimal process in piecemeal fashion, and roll them out to their clients as they become operational rather than launching a ‘big bang’ solution further into the future.

An important piece of the puzzle FactSet has unveiled in the past 12 months is the ability to curate the liquidity pools to which market participants can send their requests for quotes (RFQs) automatically or manually, on the fly.

Dubbed Smart RFQ, the latest addition to FactSet’s automation toolkit allows its clients to use their historical execution and tick data to help refine a subset of liquidity providers to which RFQs will be sent, depending on trade size, currency pairs and the provider’s historical performance in the pair.

“Our clients don’t want all their liquidity providers to know they are in the market for, let’s say, a 200 million AUD/USD trade,” explains Matsko. “They might want to slice the large trade into smaller tickets and send these as RFQs to two or three banks that consistently send them tight prices. At the same time, they might also want to send the same RFQs to random tier-two and tier-three liquidity providers to offer them the chance to win business should they be competitive that day.”

Matsko explains the aim is not to sweep the book with numerous little fills, but to strike a balance between the cost of a reasonable number of tickets and hitting liquidity providers’ top of the book.

To achieve this, the firm’s clients can build neatly curated liquidity pools according to currency pair and instruments – spot, forwards and swaps – and compare these with streaming prices. There’s nothing manual for them to do – the FactSet Smart Trade Assistant automatically handles the RFQs based on predefined metrics as trades come onto the blotter.   

“This is where we’ve seen clients advance in this space,” highlights Matsko. “It’s automation, it’s curated liquidity, it’s letting the machine do more of the work than they probably would have let it do in the past while still having control.”

Voted best trading software for FX in the 2020 FX Markets e-FX Awards, FactSet is also building solutions to help its clients reduce operational risk around their margin and collateral requirements. Nearly half of asset managers using FactSet’s FX software have now been caught by the uncleared margin rules, and more of them will be subject to margining as the last phase takes effect in September 2021.

Meanwhile, the firm is also in the process of adding electronically traded FX options to its platform, as a number of its clients have requested it build a graphical user interface to allow the sell side to electronically price more complex instruments.

Sponsored content