Custody forex services and passive currency overlay

GET IN TOUCH WITH US New window

BNP Paribas Securities Services, among the world’s leading global custodian banks, offers more than just efficient execution. We are a one-stop point of access to a large range of Custody FX solutions. We allow you to focus on your core businesses and strategy, and to outsource a large part of your risk and constraints linked to your foreign exchange and cash management, both in G10 foreign currencies and in exotic markets.

Your business faces a range of constraints, including: Liquidity access, evolving regulations, multi-currency investments. These are driving many firms to strengthen their operational organisation and control structure to achieve optimum performance.

Our FX Solutions

By working with us, you benefit from:

One of the 5 largest global custodian banks, part of a prominent global institution recognised for its FX expertise

An international provider you can fully trust with follow-the-sun capabilities

 A partner willing to support you with tailor-made solutions

A provider proposing a wide range of smart solutions whether you want to actively manage FX deals, fully outsource them or automate some flows while managing others

A very close business relationship

Get access to global and local coverage in more than 90 countries, 24 hours a day, 5 days a week, through our tailor-made FX solutions to execute your currency trading.
Automated outsourcing of FX Custody and cash management solutions

Our robust and fully automated in-house FX platform facilitates FX execution linked to all your securities trading and lifecycle events (settlement transactions, corporate actions, income events, subscriptions and redemptions, cash flows and listed derivatives).

You can determine how you want us to execute your transactions through numerous parameters (frequency, netting per account, value date and currency pair).

You can directly interact with our in-house and tailor-made trading solution by using multiple SWIFT messages.

Our offer is fully transparent: you benefit from wholesale market rates or fixing rates plus pre-agreed fixed spreads regardless of the size of the trade. All FX deals are time stamped and you have access to digital reporting tools to monitor your fully automated FX transactions.

You can learn more about this solution in the video below:
Placeholder
Transcript
  • Institutional investors face constant pressure to deliver returns and reduce costs. They must deal with a range of challenges, including the impact of currency volatility on their investments.
  • To help you maintain full oversight of your FX journey, we have developed a comprehensive program to support you in both portfolio hedging and share class hedging.
  • Let’s start with an example of portfolio hedging…
  • Your fund base currency is in Euro and you want to invest in foreign assets such as USD, GBP and CAD in order to broaden the universe of your investments.
  • Portfolio FX hedging will neutralize the impact of foreign exchange movements between the Euro and your investment currencies, either totally or partially, depending on your desired target hedge ratio.
  • Now, let’s move to share class hedging…
  • Investors willing to invest in a fund with a base currency different from their own local currency face a number of risks.
  • These relate to the currency volatility between their own currency and the fund’s base currency, that impacts the investments made as well as new flows of subscriptions or redemptions.
  • The share class hedging process will reduce the effect of FX volatility, ensuring that the performance of the hedged share class is consistent with that of the reference fund.
  • There will remain differences in performance because hedging comes at a cost or a gain due to the difference of the interest rates.
  • But the performance of the hedged share class will be largely immune to the market variation of the FX rate between the share class currency and the fund currency.
  • Outsourcing your passive FX exposures to an external provider can help you reduce your operational burden and allow you to focus on your core activities.
  • Our solution is scalable, allowing you to move from a fixed to a variable cost structure.
  • BNP Paribas Securities Services is a leading passive currency overlay provider connected to custody, fund administration, middle office and transfer agent systems.
  • We ensure an integrated and automated FX hedging process, supported by robust end-to-end workflow management.
  • And you remain in full control of your strategies. Our role is to implement and fully respect your guidelines.
  • Through our transparent, MiFID-compliant and customizable solution, we help you achieve your optimal FX hedging model.
Access BNP Paribas’ Direct Forex Trading and FX Execution Services

BNP Paribas benefits from a long presence in foreign exchange trading throughout the world and can execute your FX spots, forwards, swaps, FX options and non-deliverable forwards (NDF). By partnering with BNP Paribas Securities Services you also get access to BNP Paribas Global Markets’ Forex services including their Forex trading desks and front-to-back automated Electronic Trading platforms.

This also gives you access to comprehensive Electronic FX Trading Capabilities including market leading intelligent algorithmic FX Execution strategies and transaction cost analysis (TCA). BNP Paribas Global Markets’ team of economists and strategists in the foreign exchange market can also deliver useful insights to fit your demand for market research.

Passive Currency Overlay

We can implement and monitor your foreign exchange strategies for asset and share-class FX exposure management. Hedging strategies are set at the level of each unit, for different share classes of a same subfund or compartment, or for a given currency or group of funds.

We take charge of all the steps of the hedging process: from identifying currency risk, calculating forex exposures and hedging adjustments, to executing transactions within specified guidelines and providing reporting to monitor investment decisions.

From portfolio hedging to share class hedging we are here to help you achieve your optimal FX hedging model. In the video below you can learn more about what passive currency overlay is and how our solution can help you.

Placeholder
Transcript
  • In a challenging environment, risk management, changing regulations, cost control and IT obsolescence can threaten your foreign exchange protocols.
  • To face these challenges you can call on an Automated FX solution.
  • This is a flexible cash management solution in foreign currencies, which automates the FX process from trade origination to settlement and confirmation.
  • It ensures proper funding or repatriation of a foreign currency exposure to your preferred base currency, thus reducing your settlement risks.
  • Moreover, by outsourcing your FX needs you can benefit from the efficiency and IT infrastructure of an experienced service provider.
  • Our Automated FX solution can cover your flows in both deliverable and restricted currencies for all activities and all of your accounts, whether they are in Custody with us or not.
  • And to better accompany your investment strategy, the solution is customizable across a range of parameters such as currency, timing of FX execution, price netting options and more.
  • Our solution is fully transparent and executed against published benchmarks and market rates. The FX confirmations are time stamped and audit reports are available for your monitoring through our applications.
  • As this service is classified as an ancillary service under MIFID II, all foreign exchange costs are disclosed to you and expressed in basis points ensuring further transparency.
  • Furthermore, our solution is global and supported by a robust process improved through years of experience.
  • In a complex and changing world, our Automated FX solution can help you protect your portfolio performance.