FX Algorithms – putting the computers to work

Algorithmic trading has become popular for foreign exchange trading in recent years driven by strong demand

Algorithmic trading has become popular for foreign exchange trading in recent years driven by strong demand among corporate investors and institutional traders. An algorithm (algo) is a set of instructions to a computer to execute a specific order given a price, volume and the liquidity available in the market.

Nordea customers with interest in the FX markets have long had the ability to access markets directly via electronic channels. Despite the heavily electronic nature of the market algorithmic trading has until now been limited.

At Nordea we have lately experienced a larger demand for the use of algos from investors and our corporate clients. For these clients algos are sophisticated tools that allow them to access multiple sources of liquidity and improve trading performance. Another favourable aspect is that algos allow the user to have control over the information leakage through parametrization of the aggressiveness of the algo.

“Execution algos give traders another option to quickly and intelligently execute their FX transaction. Algos allow traders to access a greater number of liquidity pools, control market impact, increase spread capture and minimise information leakage. With so much FX volume executable electronically investors are more frequently turning to algos to help them apply the insights provided by TCA (Transaction Cost Analysis) and ultimately improve investment performance”, says Kasper Folke, Head of eFX at Nordea Markets.

With new regulation being introduced (MiFID II and MiFIR) we have also seen an increased focus on best execution, transparency and TCA to optimize trading performance. FX algos address this by providing our clients an intelligent solution to access Nordea’s unique FX liquidity.

When to use FX algos?

The deciding factors on the suitability of using FX algos are the flow and potential market impact your transaction may have. To help you Nordea Markets have established an Execution desk staffed with our dedicated specialists. “Our specialists are ready to support you with proper market colour and liquidity conditions intraday. We will help you in choosing between FX algos and other types of risk transfer solutions”, says Aku Hentilä, Head of Execution Desk at Nordea Markets.

If your goal is to achieve optimal execution on your FX transactions while reducing transaction cost and minimising market impact, then you should consider FX algos from Nordea. When trading using Nordea’s FX algos you partner with cutting edge technology and access to unique scandie liquidity. We provide a suite of six algos divided into two families of algos: benchmarking and execution optimisation. As the biggest Nordic bank we are uniquely positioned to provide you with FX algos that will make your transaction fit current market liquidity.

Nordea’s FX algo offering covers your needs giving you transparency, ease of use and unique access to liquidity in the Nordic currency market. To learn more of Nordea’s FX algo offering, please visit: www.nordeamarkets.com/fxalgo

The information provided within this website is intended for background information only. The views and other information provided herein are the current views of Nordea Markets as of the date of publication and are subject to change without notice. The information provided within this website is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.

The information provided within this website is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information provided within this website has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results.

Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.

The information provided within this website may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.

Further reading