Media & Industry News

One-two punch: New BidFX offering solves data access and storage challenges and bolsters liquidity analysis in equal measure

15 April 2021 Daniel Chambers, Head of Data & Analytics, BidFX
As participants in a massive and highly competitive market, foreign exchange traders need access to cutting-edge tools to remain competitive and effectively source liquidity. At BidFX, we strive to meet this need through our powerful technology suite, which includes our EMS platform, risk and compliance modules and transaction cost analysis (TCA), among other functionalities.
These offerings have helped numerous clients streamline processes and take greater control of their trading, but on their own they still don’t tell the whole story. With fluctuating investor sentiments, a shifting regulatory landscape and a dizzying 24-hour news cycle, all of which impact the trading and post-trade reporting landscape, institutional investors now more than ever need access to fast, reliable market data and analytics.
Of course, as with most things related to market data, that’s easier said than done. Building a data repository that traders can easily tap into and analyze comes with significant storage costs and infrastructure challenges, making it an incredibly painful process. At the same time, buy-side entities need to ensure they are always receiving the highest-quality executions. These challenges are present in all markets, but the higher level of volatility often seen in the FX space – due to the fragmentation and its OTC nature – means that the ability to evaluate counterparties with precision and in real time is even more critical than usual.
We believe our latest offering, BidFX Data & Analytics, offers an innovative solution. This new suite empowers traders at hedge funds and asset managers to efficiently harness, normalize and analyze both intraday and historical FX data, providing them with crucial insights.
Our Data & Analytics offering consists of several distinct products that all play a role in maximizing liquidity. Some of these have to do with client data, such as the collection and cloud storage of client-specific liquidity provider streams and other data they receive from their counterparties. This frees clients from the burden of housing and normalizing this data – they can simply query a bespoke, easy-to-use database to reveal insights and refine their strategies.
This goes hand-in-hand with our liquidity provision analytics (LPA) tools, which enable clients to compare counterparties based on the liquidity they are providing and make decisions accordingly. In addition, clients can use this data to back test and continually improve their trading and execution models.
Our ability to store and present client data in a user-friendly manner eliminates a number of pain points for trading firms. Delivery through a Software-as-a-Service (SaaS) model means clients do not need to dedicate development resources or server space to gain a comprehensive window into their trading. We do the work to ensure this data is collected with speed and precision. Clients can easily access it through our API, allowing them to focus on what they do best: generating alpha.
Speaking of alpha, another key aspect of Data & Analytics is our composite quote values for various currency pairs, volume sizes and the like, powered by our proprietary algorithm and created from firm and tradeable market pricing. Clients can weigh this data against LPA metrics for their own trading to gain a clearer view of how they are performing relative to the market. What’s more, because this product takes an industry-wide view and does not require the integration of client streams, it is not limited to existing BidFX trading platform clients – any firm that wants to take a more analytical approach to benchmarking, back-testing, risk management etc. can benefit.
As a former buy-side trader myself, I am keenly aware of the difficulties that funds face in setting up proprietary solutions in these areas. When your team is laser-focused on maximizing returns for clients, it’s difficult to allocate the time and resources – everyone is simply spread too thin. The ability to more easily integrate user-friendly data and analytics into workflows would have made a huge impact on our ability to make execution decisions and time the market. While my last shop was an FX-focused fund, Data & Analytics can serve the same purpose at more conventional buy-side shops where FX trades are typically made for hedging purposes. No matter why you’re in this space, accessible data and benchmarking capabilities can take your team to the next level.
These aren’t your average composite values either – the richness and quality of our underlying data means Data & Analytics provides a level of precision that is unparalleled in the FX space, especially when it comes to less developed currency pairs. Our composite data for non-deliverable forwards (NDFs) is particularly robust (note these are also streaming prices) and has transformative potential for firms in this historically opaque market. In recent years, institutional investors have increased their exposure to emerging markets and, accordingly, their hedging requirements, making this offering especially timely.
In addition to NDFs, we provide composite spot and forwards quotes data and more than 60 currency pairs in G10 and emerging markets, so traders face few limits on what they can do with Data & Analytics. This links back to BidFX’s singular focus on providing solutions for FX traders. This space is our sole focus, and our long-term engagement with it means we have a uniquely deep understanding of the market dynamics and pain points that define it.
BidFX Data & Analytics may be an exciting new offering, but it’s also an extension of what we’ve been doing for years: delivering powerful technology solutions, backed by the knowhow and resources of some of the biggest names in the global trading industry, to financial institutions trading FX. We look forward to putting this expertise to work in a new way and helping clients enhance and improve their order execution and liquidity management.
Interested in learning more? Get in touch with us.