This article was written by Michael Briody, Workflow Specialist at Bloomberg.
There is plenty to reflect on regarding COVID’s impact on businesses’ foreign exchange (FX) practice. Some buy-side, sell-side and corporate businesses trained for emergencies and had procedures in place, hoping they never had to exercise them. As a result, many companies were well prepared for the unprecedented volatility. Yet for others, the pandemic uncovered workflow vulnerabilities they did not see coming.
Early in the pandemic the FX market showed a prolonged and massive spike in volatility that ignited a market-wide need to hedge risk, which also pushed trading volumes higher. The need to trade currencies was highlighted by shifts in hedging strategies, international supply chain disruptions, investment strategies and changes in consumer behavior.
Bloomberg’s workflow specialist teams observed that the firms best-positioned to navigate these challenges had similar levels of technology sophistication in their FX workflows. Their technology featured integrated solutions encompassing pre-trade analytics high-volume capabilities, consistent pricing, multiple execution methods and a community of liquidity providers and takers, all on a reliable trading platform.
This robust workflow for the buy-side and sell-side is extremely relevant as FX players return to office. Bloomberg’s workflow specialist teams are fielding more questions around FX forecasting and trade ideas, in addition to questions about automating valuations, risk and FX trading systems that all consume the same data.
Speculative institutional, hedge fund and treasury FX has also become more prevalent as firms rush to manage FX risk. The increased demand to trade FX algos and option structures as the world witnessed changes in volatility has brought new ideas and players into the market. Market participants are realizing there is real opportunity to execute at the best rate possible by simply using tools readily available to them. Operating with a seamless and consistent FX workflow in place can ensure buy-side, sell-side and corporate businesses and FX trading can move forward without disruption.