By Gordon Platt
BEST FOREIGN EXCHANGE RESEARCH & ANALYSIS
BNY Mellon, one of the largest foreign exchange dealers in the United States, offers support in virtually all currencies, with particular expertise in emerging markets.
Derrick, BNY Mellon Global Markets: We strive to provide clients with the best in foreign exchange insights amidst tumultuous market conditions
Simon Derrick, head of currency research, BNY Mellon Global Markets, says: “We strive to provide clients with the best in foreign exchange insights amidst tumultuous market conditions. And we’re committed to giving clients access to our research wherever and whenever they need it.”
When BNY Mellon launched the company’s app for iPad users earlier this year, among the first offerings available to the bank’s clients via their iPads was its Global Markets research. “Timeliness, understanding and accessibility—that’s how our research team continues to redefine outperformance on behalf of our clients,” Derrick says.
In addition to being the largest custodian in the world, BNY Mellon acts as depository for more than 2,100 American and global depositary receipt programs from 67 countries. It is also the leading provider of corporate trust and agency services, administering more than $12 trillion in outstanding debt and 2,000 insurance trusts in 20 countries.
With more than $25 trillion in assets under custody and administration, BNY Mellon serves a wide variety of institutional and corporate clients and is uniquely positioned to assist global fund managers with their FX requirements related to securities purchases and sales, income conversions, corporate actions and tax events.
The bank has approximately 500 FX professionals in ten trading rooms around the world. The number of employees increased significantly over prior years as a result of a strategic realignment of resources that brought more than 300 members of the operations staff from the parent company into the Global Markets business. The bank trades more than $54 billion of foreign currencies on an average day, through more than 14,000 transactions.
Led by Derrick, the BNY Mellon Global Markets research team is made up of Jiangang Duo, Thomas R. Hoge III, Neil Mellor, Samarjit Shankar and Michael Woolfolk.
Brown Brothers Harriman
Chandler, Brown Brothers Harriman: We compete in providing not only market calls but also the broader interpretive framework that is indispensable for navigating the tumultuous waters
Brown Brothers Harriman is a leading FX provider to asset managers, or what are often dubbed “real money” investors. Their interest in the currency market is often a function of the impact of FX on other asset classes, notes Marc Chandler, global head of currency strategy at BBH, the oldest and largest partnership bank in the US.
Chandler says that 2011 was a very challenging year. “As the European crisis intensified, risk-asset correlations increased markedly, making everything appear to be driven by the macro-trade. Where we have been the most successful is in thought leadership and relationship excellence,” he says.
BBH delivers efficient pre-trade, trade and post-trade functions, Chandler says. “Our cross-asset market approach and integrating policy and economics, technical and fundamental analysis, in both major and emerging markets fits the needs of our client base,” he says. “While not having the sheer number of people and budgets of larger institutions, we can and do compete in providing not only market calls but also the broader interpretive framework that is indispensable for navigating the tumultuous waters.”
One of BNY Mellon Global Markets’ most important research offerings is iFlow, its multiasset product that provides access to data and insights into cross-border investment activity. Analyzing the more than $25 trillion in assets under BNY Mellon’s custody and administration, iFlow’s output is based on a significant share of the market—approximately 15% to 21% of market capitalization in most markets where the bank operates.
The information it provides encompasses daily investor activity across currencies, equities and bonds in developed and emerging markets, as well as monthly market positions. Clients also get access to historical charts with trend lines, trading signals and data on simulated portfolio performance.
BNY Mellon supports all dealing styles, from direct dealing with FX desk traders, to standing instruction execution related to securities settlement, to electronic trading through its proprietary platform, iFX Manager, or through multibank portals. The iConfirm application provides a wide variety of post-trade services, including same-day access to trade review and confirmation, online settlement processing, and mark-to-market valuation reporting.
BNY Mellon's currency administration services provide nearly $25 billion of outsourced currency hedging. The bank expanded its Asian currency-hedging services in 2011, powered by iHedge, its proprietary platform. These services enable clients to calculate and execute hedge transactions and to make periodic adjustments.
Foreign exchange strategy and hedging have gained importance thanks to increased volatility in the FX markets. Deutsche Bank has developed online pricing for currency derivatives streamed over autobahnFX.
“We have moved away from offering just hedges to also designing entire bespoke programs, with algorithmic product selection that has been shown to improve performance by up to 300 basis points per annum,” says Zar Amrolia, global head of FX at Deutsche Bank. “In addition, we have introduced several products aimed at helping both corporates and financial institutions efficiently hedge balance-sheet and earnings risk, and several innovative tail risk hedges that were used by clients to hedge equity or credit risk.”
The bank’s pricing engines use sophisticated mathematical techniques to generate FX derivatives prices automatically, rather than relying on manual updates. Deutsche Bank’s ATOM, or automated tools for options order management, offer a number of e-commerce innovations. The bank’s clients can leave orders in premium terms and in volatility terms on options and strategies involving a wide variety of currency pairs. “We also publish strategy pieces on everything from detailed analysis of the Greek crisis to the latest innovations in corporate hedging,” Amrolia says.
BNY Mellon’s Global Markets Research provides analyses of the currency markets with frequently updated market commentary from currency strategists. These blogs include the Morning Update, which highlights news headlines and commentary and is updated twice daily: at the open of trading in London and New York. The FX Comment blog provides commentary on breaking market events during New York trading hours. The iFlow Daily provides insight into cross-border flow information.
BNY Mellon also gives monthly updates on quarter-end currency forecasts in more than 70 currency pairs. Its forecasts are based on economic and capital-flow fundamentals in the major currencies. Forecasts for emerging markets incorporate purchasing power parity and other currency regime factors. The bank also uses a value-based process to identify currencies that are trading out of line.
BNY Mellon offers competitive pricing in all of the major European, Latin American and Asian currencies for FX spot, forward and option products. It also offers global support of market making in nondeliverable forwards.
The research and commentary of BNY Mellon’s Global Markets’ strategists is now available through more channels than ever. In addition to the website at http://gm.bnymellon.com, the research offerings, including iFlow, the proprietary cross-border capital flow research tool, are accessible through the BNY Mellon Connect Mobile app for iPad, the new Global Markets Portal and on Twitter (@sjderrick).
A new tool, Balance of Payments (BOP) Insight, tracks long-term trends in trade and investment using data from finance ministries, central banks and statistics agencies.