When we established Digital Vega in 2010 our aim was to build a multibank platform where clients could access FX options liquidity and trade on the best available price. Roll forward thirteen years and while liquidity is still of the upmost importance, equally so is workflow automation. Driven by transparency, regulation and efficiency FX trading firms are increasingly looking to trade more of their FX Options online, whilst also demonstrating Best Execution and driving automation throughout the trade lifecycle.
As we extend the functionality of our FX Options trading platforms, our clients and Liquidity Providers increasingly request services which automate manual, repetitive, and time-consuming tasks, such as data entry, processing, and reporting.
The benefits of automation
Improved efficiency and productivity – FX markets are complex and fast-paced, and manual processes can be slow and prone to errors. Workflow automation significantly improves efficiency and productivity by streamlining processes, reducing cycle times, and minimising errors. For example, automation can help to speed up responses to RFQs, streamline trade processing, and reduce the time and effort required for reporting.
- Enhanced compliance and risk management - Regulatory compliance is a critical concern for all financial firms. Workflow automation can help to ensure that all regulatory requirements are met, including KYC, AML, and MiFID II. Automation can also help to identify and mitigate risk by flagging suspicious activities, monitoring trading patterns, and enforcing internal controls.
- Cost reduction and scalability – FX trading firms are under constant pressure to reduce costs and improve profitability. Workflow automation can help to achieve these objectives by reducing manual intervention, minimising errors, and improving scalability. For example, automation can help to reduce the need for manual reconciliation, data entry, and reporting, which saves time and reduces labour costs. Automation can also help to scale operations more easily, allowing firms to handle larger volumes of trades and clients without the need for additional staff.
- Enhanced client service - Workflow automation can also help to improve client service and satisfaction. By streamlining processes and reducing cycle times, firms provide a faster and more efficient service to clients. Automation can also help to ensure that client requests are handled promptly and accurately, reducing the risk of errors, and improving overall client satisfaction. Automation can also provide real-time access to account information, trade history, and other relevant data, which can enhance transparency and trust.
- Competitive advantage - In an industry where speed, accuracy, and efficiency are critical, firms that automate their processes can operate more efficiently, reduce costs, and provide a faster and more reliable service to clients. This helps to attract new clients, retain existing ones, and differentiate firms from competitors.
Workflow automation at Digital Vega
We continue to invest in automating trade workflows. Recent examples include automating the production of new analytics and reporting, which is now available for clients and Liquidity Providers, as a means of providing independent Transaction Cost Analysis (TCA). LPs receive a monthly breakdown of their performance, execution rates, spreads and response times, enabling them to review and refine their pricing. Clients receive Best Execution and bespoke liquidity reports, providing information on currencies traded, best performing LPs and spread data.
In post-trade, Straight Through Processing (STP) is a prerequisite for clients and LPs, and Digital Vega provides a proprietary STP solution covering the full range of vanilla and complex structured products. We have also partnered with external partners to provide clients and LPs with full end-to-end automated solutions.
These examples show that workflow automation is becoming increasingly important in FX markets, as firms seek to improve efficiency, reduce costs, and manage regulatory compliance and risk. By leveraging technology to automate manual processes, firms can improve productivity, scalability, and client service, while also gaining a competitive advantage in a challenging and dynamic industry.
You can read Mark's article and further industry insights in the latest edition of The Financial Technologist. Download your free copy here.
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