Best Execution FX: A Shifting Landscape

As European regulators eye the foreign exchange market, the onus is falling on buy- side firms to develop best execution standards and take more control over their trades, according to a recent industry conference.

In light of recent scandals involving currency-rate rigging, and the controversy over ‘last look’, where banks have the right to reject a trade after a client requests a quote, traders are paying close attention to data.

Some quantitative firms are already focused on algorithms and aggregation tools that pull together disparate pools of liquidity from a mix of banks and ECNs. Yet in the highly electronic and fragmented currency markets, with no central exchange or consolidated data feed, it’s hard for investors to create a composite picture of the market.