FX Algorithms Could be Great for Long Term But...

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FX Algorithms Could be Great for Long Term But...

Short-term volatility might crimp returns for many asset owners
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FX algorithms could be great for long term but Short-term volatility might crimp returns for many asset owners http://bit.ly/2fxUfWr
Tuesday, November 8, 2016 - 4:05am

CAMPAIGN: Bloomberg: Philanthropy & Engagement

CONTENT: Article

Originally posted on Pensions and Investments

The increased use of algorithms in foreign-exchange trading is expected to be a long-term boon for pension fund executives seeking better execution and lower transaction costs, but in the short term the algorithms could cause market volatility that might affect investors' costs and returns.

The latest case in point — the Oct. 7 decline in the British pound against the U.S. dollar that sent it to its lowest level in 31 years after an early morning trade caused algorithms, possibly set off by news or social media reports on Brexit, to sell off the pound in a matter of moments.

“Yes, institutional investors should care about algorithms,” Denis Ignatovich, co-CEO, Aesthetic Integration Ltd., London, a financial technology startup that offers formal verification of trading algorithms. “There are billions of dollars at stake with them. All these things you're seeing — the flash crash we just saw with the pound — are the same issues other critical industries have had for some time.”

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Keywords: Innovation & Technology | CFTC | Commodities | FX | Innovation & Technology | Long-term | Responsible Business & Employee Engagement | Trade | algorithms | asset owners | data

CAMPAIGN: Bloomberg: Philanthropy & Engagement

CONTENT: Article