Foreign exchange and currency overlay services

Operational efficiency

BNP Paribas, among the world’s leading global custodian banks, offers more than just efficient execution. We are one-stop shop for a large range of Foreign Exchange solutions. We allow you to focus on your core business 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 offer

BNP Paribas is one of the 5 largest global custodian banks in the world, an international provider that you can trust with follow-the-sun capabilities.

Get access to a 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

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

Our FX solutions include:

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, listed derivatives and cash balances).

It is available both for custody accounts with us and accounts held with other custodians, discover it now through our video:

Automate FX video cover
  • 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.

With Automated FX you can benefit from:

  • The ability to tailor your programme through numerous parameters (frequency/execution timing, netting, value date, amount and currency pair)
  • Competitive and transparent pricing based on benchmark rates and predetermined spreads
  • Reduction of FX settlement and operational risk
  • A top of the line digital reporting application allowing you to monitor and manage your FX orders in real-time, discover it through the video below:
Custody FX Application video

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 sub-fund or compartment, or for a given currency or group of funds.

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.

Passive Currency Overlay
  • 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.

With our Passive Currency Overlay solution you can benefit from:

  • Protection against FX market volatility
  • Operational efficiency as we take charge of all the steps of the hedging process (from identifying currency risk, calculating forex exposures and hedging adjustments, to executing transactions and reporting)
  • An internally developed and fully STP system enabling high flexibility and reactivity
  • An experienced team covering asset and share class hedging

BNP Paribas has a long standing 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 you get access to Forex services including our Forex trading desks and front-to-back automated Electronic Trading platforms.

With our direct FX Dealing and FX execution services you can benefit from:

  • Comprehensive electronic FX trading capabilities
  • Market leading intelligent algorithmic FX execution strategies
  • Our single dealer platform, CORTEX FX
  • A team of traders with extensive FX experience
  • BNP Paribas’ market research