Automatic currency trading services saves time and money

Most companies and financial institutions doing business in more than one currency can save time and money using one of the many automated currency trading services available from SEB and other banks. This way customers also ensure they avoid some risks associated with manual processes.?

There are many reasons for trading currencies and there are several product types to cover those needs. Spot trading for example is good for customers that need to exchange money in one currency for another here and now. Forwards are good to hedge against currency fluctuations when customers have payments coming in or going out sometime in the future. Swaps and options are the two other main product types, and they cover specific needs.?

Traditionally currency traders in companies and financial institutions have traded on a streaming price, requested a price or left an order. They have done this through?different channels – called the bank or traded directly via a single-bank or multi-bank portal.?

“For many companies and institutions, it can make sense to automate those trades according to specific rules. There are many automation services available for a range of needs,” says James Prasad, Head of business development in SEB’s foreign exchange (FX) unit.?

Algorithmic Trading?

Algorithmic trading, or algo trading, is a widely used service by companies that want to transact large amounts without impacting the market. Algo trading increases transparency and improves execution.??

Account based Sweeps?

All companies – large and small – that have multiple currency accounts across different subsidiaries must regularly rebalance their account balances. This is time consuming and prone to error if done manually. Using a simple rules-based automation service can be very beneficial in these cases.?

Hedging invoice payments?

Companies that source internationally often get invoices in several currencies. To hedge against currency fluctuations between when the invoice is issued and when it is due, they can use a semi-automatic service to make the process smoother. After uploading invoices to the bank’s system, hedging can be made fully automatic as the system reads all the necessary data from the invoice.?

Dedicated products for financial institutions?

Financial institutions, such as asset managers or fund managers, often deal with equity or fixed-income investments in various currencies. To remove currency risk from the equation, they do FX hedges. The currency overlay service helps make it automatic by rebalancing hedges based on pre-defined rules and rolling expiring contracts when needed.?

Many fund managers have funds denominated in their local currency and create share classes in other currencies. They can use a share class hedging service which can help them buy and sell the relevant currencies automatically.?

?Integrating automation with APIs?

Some companies and financial institutions trade currencies intensively and may want to integrate this ability into their own systems using so-called application programming interfaces (APIs) instead of logging into their bank’s systems every time.?

?“We have a suite of FIX and REST APIs covering?most of our products and services. Rest APIs ?are easy for clients to implement into whatever system they have. The biggest cost in currency hedging is the time it takes between when the risk arises and when it is hedged. Implementing APIs can completely eradicate that risk,” says James Prasad.?

He says that regardless of what automation solution a customer chooses, they will reduce risks inherent in doing things manually. The services can also be combined in many different ways depending on the client set up and what the company wants to achieve.?

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