07 July 2017
Reporter: Stephanie Palmer

New tool to tackle FX risk exposure

NEX Optimisation has launched a new automated credit rebalancing tool to combat limit over-allocation by prime brokers.

Designed in partnership with Citi, Rebalancer has already gone live over five electronic communication networks (ECNs), and is scheduled to be rolled out across more platforms before the end of the year.

It is intended to help prime brokers reduce their foreign exchange risk exposure by reducing the amount of excess they carve out at each ECN.

Rebalancer allows prime brokers that allocate credit to multiple trading venues the ability to move it around, if there is excess credit in one and a surplus in another.

It considers the client’s net position across all venues and automatically extends and withdraws credit as required.

Sanjay Madgavkar, global head of foreign exchange prime brokerage at Citi, said: “The development of Rebalancer is a very important milestone for the prime brokerage industry and we are very excited to see the product go live. This innovation will serve the needs of prime brokers as well as trading venues and clients, all of whom have an interest in enhancing risk management.”

Rebalancer also directly connects to NEX Optimisation’s Traiana designation notice manager service.

Joanna Davies, managing director of Traiana, said: “This is a further example of NEX Optimisation leading the way in risk mitigation in the foreign exchange market.”

“Recent volatile markets and exceptional events have led foreign exchange prime brokers to intensify their focus on risk management. By allowing dynamic reallocation, Rebalancer will give these prime brokers further comfort, leading to more credit availability in the market as a whole.”

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