Hong Kong, July 8—BNY Mellon and Deutsche Bank have jointly developed a new API-enabled foreign-exchange (FX) solution that can dramatically improve confirmation times for restricted emerging-market currency trades.
The digital solution, initially being applied to custody FX transactions in Korean Won, aims to reduce the pre-trade lifecycle to seconds from hours, minimizing the operational burden and manual intervention that can be prevalent in emerging-market custody FX.
The solution is already live in Korea, with the Indonesian Rupiah and the Indian Rupee targeted next. Subsequently, it will be progressively rolled out to a broad range of restricted currencies, which are linked to investors’ underlying equity or fixed-income transactions.
Leveraging existing bots between the two banks for instantaneous communication to help eliminate market frictions, the solution can also bring trade remediation closer to the time of execution. The resulting benefits can also reduce price slippage for clients between the FX leg of a transaction and the equity or fixed-income security trade.
Digital innovation in FX markets is accelerating in emerging markets, particularly in Asia, because securities denominated in those currencies are increasingly being included--or more heavily weighted--in emerging-market indices and exchange-traded funds (ETFs).
We are constantly looking at ways to introduce cutting-edge technology for the benefit of our clients. With this partnership, we are not only seizing an opportunity to alter back-office processing in restricted markets, but more importantly, we are providing front-office users with faster execution and enhanced workflow transparency.
“This is a milestone in solving a long-standing challenge in emerging markets, with broad application for the industry and our clients. This demonstrates our commitment to market leading execution, at a time when investor participation and focus on costs in these markets are increasing. The collaboration between the two organizations leverages our strengths and expertise in emerging markets, custodial FX, as well as digital work-flow and innovation,” said David Lynne, APAC Head of Fixed Income & Currencies, and Corporate Bank, at Deutsche Bank.
This press release has been approved and/or communicated by Deutsche Bank AG or by its subsidiaries and/or affiliates (“DB”). Deutsche Bank AG is authorized under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and by the Prudential Regulation Authority and subject to limited regulation by the Financial Conduct Authority and Prudential Regulation Authority.
Details about the extent of our authorization and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority are available from us on request. Securities and investment banking activities in the United States are performed by Deutsche Bank Securities Inc., member NYSE, NASD and SIPC, and its broker-dealer affiliates.
Lending and other commercial banking activities in the United States are performed by Deutsche Bank AG, and its banking affiliates. Copyright (C) 2020 Deutsche Bank AG