FX Best Execution PracticesKnowledge HubProprietaryOptimal FX Execution Times

December 15, 2020by admin0

If you had only one time of the day to execute all your FX, what time would that be?

Asset Owners & Investment Managers looking to set up efficient processes to comply with the FX Global Code and ensure FX Best Execution, for funding or hedging, will identify the range of their currencies that they plan to trade and their corresponding optimum liquidity times. Due to operational limitations & netting considerations, there is usually a significant holding period before an order is executed. This holding period can bring the benefit of netting, but also subjects Investors to additional market risk and changes in liquidity, which will affect the execution quality (cost).

For traders looking to execute the bulk of their FX risk once or twice a day, London & New York mornings are consistently the most liquid periods where spreads are tighter, and markets can handle higher volume trades. Best practices for FX execution should be developed to be flexible enough to maximize netting opportunities while managing market risk and scheduling execution for the most optimal times.

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