Asset managers have been slow to switch FX trading systems due to operational challenges, and the implications of selecting an unreliable/inadequate provider, according to analysis by The Finance Hive, a private network for the senior buyside community, in partnership with EBS Institutional.
The study, which canvassed 168 portfolio managers across Europe Middle East Africa Pacific found over half or 55% still use multiple platforms mainly due to regulatory tightening coupled with significant changes in the way banks service their FX clients.
It also showed that asset managers also wanted trading systems that catered to the diversity of their portfolios as well as simplified execution across the portfolios.
Across all three locations, FX spot and forwards volumes were the highest, followed by swaps, PM directed trades , equity hedges and futures and overlay.
Other items at the top of the priority list included improved integration, execution flexibility, and better algorithms along with more useful data, deeper liquidity, providing forward points, and netting.
In terms of choosing the right trading platform such as an order management system (OMS), the analysis found it depends on the internal infrastructure of each asset manager. This includes size and set-up as well as the need for customisation.
The research also showed that asset managers were concerned if one OMS went down, they had access to trading on another platform.
“If asset managers are hesitant about moving trading systems, it is because they are not confident there is one solution that supports the entire FX workflow from order generation and order management to the execution and reporting of the order,” said Hugh Whelan, Head of EBS Direct Trading Platforms, an FX workflow solution provider
He added, “These findings reinforce the need to go beyond offering deep liquidity and an easy to integrate system. Asset managers require far more sophisticated solutions to address the multiple FX workflow challenges they face today with their portfolios.”
©Markets Media Europe 2021