When it comes to FX operations, 43% of FX fund managers pointed to demonstrating best execution and 40% identified getting comparative quotes as two of the biggest challenges, according to MillTechFX Survey 2022.
The report, which polled 250 senior fund manager finance-decision makers, also found that 35% highlighted fragmented service provision and 34% thought securing credit lines were the biggest hurdles.
This was followed by 33% for cost calculation and 28% for forecasting exposure.
Other findings included the increasing importance of environment, social and governance with 58% of fund managers wanting that their FX counterparties must have strong ESG credentials while 36% believed it was an important consideration.
Only 6% said it was not part of their decision-making processes.
In addition, 84% said they were looking into new technology and platforms to automate their FX operations, while 32% said automation of manual processes was the most important factor in terms of FX management.
The research still found some barriers to outsourcing including a perceived lack of control for 41%, high costs for 36% and integration for 35%.
“Volatility has dominated the FX market so far in 2022, driven by high inflation, rising interest rates and geopolitical issues,” says Eric Huttman, CEO at MillTechFX.
He adds, “As a result, FX risk management has become a strategic priority for fund managers who need to protect their returns against currency moves.
Despite this threat, fund managers are struggling with a number of issues when it comes to their FX setup, such as best execution, operational inefficiencies, transparency and governance.
This has led the vast majority of senior finance decision-makers to explore new technology and seek to embrace digitisation in a bid to streamline operational processes.”