jeudi 19 mars 2015
Bank of New York Mellon's Best FX Execution Was Pretty Bad
Posted on 17:36 by nice news
Bank of New York Mellon provides custody services to a lot of big investor clients, pensions, endowments, etc. When those custody clients have foreign exchange needs -- to buy or sell foreign securities, for instance -- they come to BoNY Mellon. This creates a nice opportunity for efficiency: BoNY Mellon has a lot of clients who want to exchange dollars for foreign currency, and a lot of clients who want to exchange foreign currency for dollars, so it can pair them off against each other, operating its own little internal foreign-exchange trading venue.
Or it could do this:
Throughout a trading day or session (which could be as long as 24 hours), as each custodial client's account generated FX transactions to be executed pursuant to SIs, the Bank's practice was to aggregate those FX transactions for all SI clients and group them by currency pair. Near the end of the trading day or session, the Bank priced those SI FX trade requests it had received throughout that day or session.
So that seems a little inefficient -- why wait until the end of the day to price the trades? -- but it's basically fine. Sometimes the currency goes up, sometimes it goes down, in expectation cl
Or it could do this:
Throughout a trading day or session (which could be as long as 24 hours), as each custodial client's account generated FX transactions to be executed pursuant to SIs, the Bank's practice was to aggregate those FX transactions for all SI clients and group them by currency pair. Near the end of the trading day or session, the Bank priced those SI FX trade requests it had received throughout that day or session.
So that seems a little inefficient -- why wait until the end of the day to price the trades? -- but it's basically fine. Sometimes the currency goes up, sometimes it goes down, in expectation cl
Bank of New York Mellon's Best FX Execution Was Pretty Bad
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