Oleg Shevelenko

Bloomberg FXGO expands execution and workflow suite

May 2023 in Product Reviews

Bloomberg’s FXGO is one of the markets most trusted e-FX trading platforms, with an unrivalled range of solutions designed to keep pace with the evolving market conditions. Oleg Shevelenko, FXGO Product Manager at Bloomberg, shares some of the latest developments and to the offering and explains how this expansion reflects the changing execution needs of Bloomberg’s clients.

How has FXGO developed over the past year in its own right and as a part of the wider Bloomberg Business?

FXGO has accelerated investment in trading workflow tools that respond to client needs by offering innovative, forward-looking solutions. A combination of cost-pressures, emphasis on improving operational standards and adoption of the Global Code of Conduct kept workflow and execution efficiency at the forefront. In response, FXGO expanded its automation suite to offer a full spectrum of FX instruments including Spot, Forwards, Swaps and NDFs. The fact that our automation and analytics tools are multi-asset and support a broad range of instruments across Fixed Income, Equities and FX is a key factor for many of our clients as most asset managers and hedge funds manage multi-asset portfolios.

We continued to expand our workflow toolkit and released the ability to slice large orders and execute over time, based on the best risk transfer price, which has proven to be particularly useful in less liquid currencies. The FX market is truly global and so is the FXGO user base, which is present in more than 140 counties. To enhance execution quality for our growing Asia-Pacific community, FXGO has launched a hosting solution in Singapore, aimed at improving pricing and trade negotiation for our local clients which will continue to support electronification and the growth of the local markets in the region.

How has the liquidity landscape changed in the recent months?

Like all financial markets, the foreign exchange market experienced recent volatility periods related to geopolitical instability in Eastern Europe and turbulence in the US banking system.

The importance of algos as an alternative execution method becomes even more essential in volatile markets, as liquidity providers typically decrease the amount of electronic liquidity which they stream on principal basis or widen bid-ask spreads. During periods of volatility, we observed a 15-20% increase in the usage of algos, particularly liquidity seeking strategies, as they allow clients to lower execution costs and market impact for their larger orders.

We have also attracted additional algo providers, including regional and non-bank providers offering their unique liquidity to our clients including local currencies and peer-to-peer networks. As clients require finer control over their order execution, especially in volatile markets, we enhanced our algo suite to support more advanced workflows such as strategy amendments and rapid fills.

As far as derivatives trading, the Standardized Approach to Counterparty Credit Risk (SA-CCR) and further waves of Uncleared Margin Rules (UMR) impacting a broader client base had an immediate effect on the cost of dealing in forwards and swaps. Asymmetry in the global implementation of those rules created further challenges for clients. Access to new liquidity and additional levels of price transparency became key. Therefore, our clients particularly welcomed the enrichment of our forward pricing tools with new price sources and pillar dates, offering swaps pricing and trading via the RFQ API as well as the expansion of our orders suite to support limit and benchmark orders in swaps.

Has demand changed for pre and post-trade analytics and reporting? How have you responded to this?

Increased regulatory and best execution standards are not only driving the need for a systematic approach to execution and increased levels of automation but also require firms to analyze resulting execution costs and change their execution process accordingly.

FXGO integration for both execution and automation workflows with our multi-asset, transaction cost analysis tool (BTCA) allows clients to analyze their trades alongside Bloomberg’s market data to deliver powerful analysis against a wide range of benchmarks. Subsequently, post-trade analytics becomes an input into pre-trade decision making including the execution style and dealer selection forming a very well-defined execution process. As the FX market is bi-lateral and relationship based, creating a common framework allowing clients to fully understand the insights of the liquidity provision and offering liquidity providers a detailed view into the trading behavior of their clients is key to improving the trading experience for both sides.

FXGO’s new Pricing Quality Analytics tools delivered through Bloomberg’s multi-asset reporting tool for electronic trading (MISX) offer those insights and form a state-of-the-art quantitative platform for bi-lateral interaction and continuous liquidity improvements.

What will be your areas of focus looking ahead to this year and beyond?

We believe that the FX market is going to continue to develop at a rapid pace. We are prioritizing our development pipeline to accommodate both anticipated changes in market infrastructure, as well continuing to offer disruptive technologies in the areas of pre-trade optimization, workflow automation and subsequent data analysis. We are also going to continue to offer innovative solutions to bring more transparency into derivatives and local markets – including FX Options, NDFs and onshore trading tools – to connect participants and enhance the markets.