Asset Managers Leverage BBH’s InfoFX platform and FX Simulator to Solve for T+1 Challenges

May 09, 2024
BBH’s Foreign Exchange solutions continue to help optimize clients’ processes ahead of compressed trading cycles.

Industry shifts such as T+1, along with increased cost pressures and stakeholder demands, test asset managers across the front and back office. With a proven track record of solving for the asset manager’s ever-evolving foreign exchange challenges, BBH’s FX solutions continue to help managers adapt to market shifts including the move to shorter settlement cycles in the U.S., Canada, and Mexico later this month.

While the move aims to improve efficiencies and reduce risks for investors and market participants in the long run, the change will stress existing execution and operational workflows and resources, where FX is a critical component, particularly in the U.K., Europe, and Asia.

RJ Rondini, director at the Investment Company Institute, which represents global buy-side firms, stated last month: “We recently ran an industry preparedness survey, and 70% of respondent firms said FX was the number one issue for them in T+1.”

New Simulation Tool Shows 99%+ Success Rate for Clients Using BBH's InfoFX

To assist managers in evaluating potential FX conflict scenarios under T+1, BBH developed a simulation tool that replicates a T+1 environment with a client’s historical trading activity.

This enabled BBH FX clients to review existing workflows to model the hypothetical impacts of the new timing constraints and identify actionable next steps in preparing for T+1. The results have demonstrated strong preparedness amongst current InfoFX users, with less than 1% of trades flagged for attention and since resolved with workflow adjustments.

Flexibility through Automation

InfoFX, BBH’s automated solution for security related FX, is enabling a smooth transition to T+1 through its direct connectivity to the investment process. InfoFX supports:

  • Direct connectivity to the manager’s operating models to minimize timing lag and automate settlement workflows across accounts and custodians
  • Manager configurable execution parameters to help achieve an optimal execution strategy
  • Real-time pre- and post-trade reporting to provide managers with T1 settlement alerts and analytics tools to assess execution quality
  • Fully scalable work-flow allowing managers to easily add mandates regardless of custodian

Since its launch in 2007, InfoFX has been supporting asset managers through a variety of industry shifts and has been integral to the evolution of many BBH clients’ operating models, particularly following the introduction of third-party restricted market capabilities in 2010 and corporate actions related FX soon after. As an automated platform optimized for asset managers, InfoFX is used by managers across a continuum of size and complexity, supported 24/6 by our team of experts across global offices.

T+1 and Beyond... Addressing Managers' Current and Future Needs

Through the T+1 simulator exercise, and consulting with clients and industry experts, BBH identified additional features and functionality to improve the overall experience for our clients, including T+1 Holiday Alerts and Real-time release of potential “late trades.”

“The 17-year evolution of InfoFX has it well positioned to help our clients successfully navigate events like T+1. But our work does not stop here,” says Nicole Walsh, Global Head of FX Product, Managing Director. “With an ever-growing investment in our FX solutions, we will continue to innovate to help managers navigate shortening settlement cycles in other jurisdictions, as well as continually evolving market dynamics.”

This update is intended only for distribution in the United States, United Kingdom, Switzerland and Japan.

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