Deutsche Bank and BNY Mellon develop API-enabled FX solution

By Edil Corneille

BNY Mellon and Deutsche Bank have jointly developed a new API-enabled foreign-exchange (FX) solution, initially being applied to custody FX transactions in the Korean Won. The digital solution can improve confirmation times for restricted emerging-market currency trades. It aims to reduce the pre-trade lifecycle to seconds from hours, thereby minimizing the operational burden and manual intervention that can be prevalent in the emerging-market custody FX.

The solution is live in Korea. The Indonesian Rupiah and the Indian Rupee are being targeted next. Subsequently, the FX solution will be progressively rolled out to a broad range of restricted currencies which are linked to investors’ underlying equity or fixed-income transactions.

David Lynne, APAC Head of Fixed Income & Currencies, and Corporate Bank, Deutsche Bank enunciated, “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.”

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.

Jason Vitale, Global Head of FX, BNY Mellon elucidated, “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.”

Emerging markets across the globe are witnessing an acceleration in the digital innovation for FX markets. This is particularly seen in Asia as the securities denominated in those currencies are increasingly being included or more heavily weighted in emerging-market indices and exchange-traded funds (ETFs).

Also, read: Singapore Exchange (SGX) to fully acquire BidFX for US$128 million