Operational challenges hinder asset managers adopting new FX trading systems quickly, according to new study

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Asset managers have been slow to switch FX trading systems due to operational challenges and the implications of selecting an unreliable/inadequate provider, according to analysis by The Finance Hive in partnership with EBS Institutional.

The study – which assessed 168 portfolio managers across EMEA, North America and APAC – found that despite the majority of asset managers actively wanting and needing an FX trading system that catered for the diversity of their portfolios, over half of firms surveyed (55 per cent) use multiple platforms.

What was also consistent is the need for trading systems that simplify execution across these diverse portfolios. Across all three locations, FX spot (~80 per cent) and forwards (~70 per cent) volumes are the highest, followed by swaps (55 per cent), PM directed trades (40 per cent), equity hedges (38 per cent) and futures and overlay (26 per cent).

The findings show that decisions to select the right trading platform, such as an order management system (OMS) that is used for filling trade orders electronically, depends on the internal infrastructure of each asset manager. The research also showed that if one OMS went down, it was important to have access to trading on another platform.

“If asset managers are hesitant about moving trading systems, it is because they are not confident there is one solution that supports the entire FX workflow from order generation and order management to the execution and reporting of the order,” says Hugh Whelan, Head of EBS Direct Trading Platforms, an FX workflow solution that fully integrates into investment managers’ existing OMS systems. “These findings reinforce the need to go beyond offering deep liquidity and an easy to integrate system. Asset managers require far more sophisticated solutions to address the multiple FX workflow challenges they face today with their portfolios.”