LSEG’s Post Trade Solutions has launched a new service – Market Risk Optimisation – to reduce market risk, specifically for FX options.
The new offering integrates with LSEG’s multibank FX platform, FXall, and is expected to allow market participants to trade in and out of market risk, enhance liquidity and reduce transaction costs through access to a wide range of trading opportunities.
The development of the product has also involved industry input, following a successful proof of concept through the input of 13 sell-side FX options desks.
Andrew Williams, chief executive of Post Trade Solutions at LSEG, said: “Since launch, our optimisation runs have helped to reduce resource requirements, with a focus on counterparty risk. The next logical step in the evolution of our services is to use optimisation to reduce market risk.”
Specifically, the service analyses participant axes across a variety of tenors and risks, to then suggest an optimised set of trades that fit within a client’s specified constraints.
Additionally, the end-to-end process is designed to be completed within 30 minutes and run at any frequency required by the market, to ensure it is responsive to market changes.
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The launch also marks an expansion of LSEG’s Optimisation service for counterparty risk, initially unveiled in 2017 as part of an effort to optimise cleared and uncleared margin.
“FX options was an obvious asset class to target at launch, since its complexity and liquidity lends itself to optimisation,” added Williams.
“The front-office have been very receptive to the new service, and we look forward to working with new and existing clients as we evolve in line with market requirements.”
The launch of the offering also follows news in October that LSEG had partnered with 11 leading global banks to receive investment into its Post Trade Solutions business.
Bank of America, JP Morgan and UBS are among the banks participating in the deal.