TORA launches FX auto-hedging solution for equity pairs

By Sunniva Kolostyak

TORA, the investment management technology provider, has released its new FX auto-hedging function for equity pairs trading to enable operational efficiency and revamp risk arbitration trading.

The solution is part of the equity pairs trading algorithm suite and delivers advanced operational trading efficiencies, according to the FinTech, which delivers front-to-back cloud-based order and execution management systems (OEMS) supporting the full trading lifecycle.

The function offers automatic hedging for clients’ cross-currency equity pairs and equity derivatives trading – welcomed by risk arbitration desks where managing FX exposure is essential to performance.

Ovidiu Campean, Global Head of Product at TORA, explained that the firm has aimed to make the new solution incredibly easy to use.

“All the trader needs to do is select the FX base currency and counterparty from an intuitive dashboard. As the equity orders begin to fill, the algo calculates the live FX exposure and creates orders to maintain the FX hedge. An added benefit of the solution is that the trader is not tied to executing the FX hedging orders with the same broker as the equity orders.”

TORA explained that traditionally, risk arbitration traders have managed multi-currency spread orders using specialised algorithms in one system and another separate system to manage their corresponding FX risk. Using several different applications and/or spreadsheets can be incredibly time-consuming for the trader to calculate, maintain and update several times throughout the trading day. It can also result in imperfect FX hedging and, in certain scenarios, poses operational risk of significant mis-hedging.

The new system is capturing all transactional information within the OEMS in order to provide trading desks with a single view of all activity. TORA’s buy- and sell-side clients will then manage risk on pair orders with high granularity and control across aggression levels and execution styles.

Also commenting, Robert Dykes, CEO of TORA, said: “We are really excited about our new equity pairs FX auto-hedging capabilities. The new functionality will enable superior operational efficiency by helping risk arb traders to easily currency hedge their pairs trading in one completely automated system.”