ITG takes FX into a new era of transparency
Agency broker ITG has
released a transaction cost analysis product for the institutional FX market that aims to improve transparency for buy-side firms.
ITG TCA for FX uses ten providers of FX data, including market makers,
electronic communications networks and banks. The offering measures
transactions against tick-level traded rates, indicative rates and the forward
Traditionally, FX has
been a secondary concern for many asset managers, but a series of high-profile lawsuits
in which asset owners and money managers have sued custodian banks for alleged
overcharging has increased the spotlight on FX execution quality.
ITG TCA for FX is
designed to help buy-side traders to better understand the liquidity landscape
and manage volatility, so that they can reduce trading costs and improve their
FX strategy. ITG already offers a similar product for equities.
“Foreign exchange is
the largest and most liquid securities trading market, but it is also among the
least transparent and most challenging to trade in,” said Ian Domowitz, head of
ITG Analytics. “ITG TCA for FX combines the power of ITG’s equities TCA
platform with a set of FX transaction data to measure performance, improve
execution processes and quality and fulfil compliance requirements.”
Bid-ask spreads in FX
may provide a challenge to asset managers more accustomed to equities. In FX,
small transactions tend towards wider bid-ask spreads, medium size transactions
typically have narrower spreads, but for large transactions the spreads are
wider, due in part to the risk-transference role of FX trading.
The ITG FX TCA
offering joins a similar service launched by New York-based agency broker and
technology provider Abel
Noser earlier this month.