An automated FX solution implemented by BNP Paribas Securities Services (BNP Paribas) for Australian fund manager Northcape Capital provides a new way for asset managers to manage foreign exchange (FX) transactions involving several financial services providers.
BNP Paribas was appointed by boutique manager Northcape Capital to manage the FX execution of a range of developed market currencies across their portfolio of middle office clients, complementing BNP Paribas’s existing portfolio administration and custody mandate. In order to do this, BNP Paribas enhanced an existing proprietary FX service already in place for custody clients and expanded its Middle Office FX solution (MOFX) to Asia pacific clients.
MOFX simplifies FX transactions for asset managers who interact with multiple custodian banks – typically appointed by asset owners or their clients – and have to manage different FX protocols (timing of FX execution, FX rate). MOFX enables asset managers to execute FX transactions earlier in the trade lifecycle – at the middle office level instead of custody level – to optimise execution and enhance controls. MOFX also comes with a customisable dashboard showing a real-time view of each deal lifecycle, leading to enhanced FX reporting.
Marie Charlotte Schmit, Global Head of Client Management, FX and Passive Currency Overlay (PCO) at, BNP Paribas Securities Services said: “Northcape was seeking a fully integrated foreign exchange solution that would allow for ease of settlement for their funds and mandates held with several different custodians. In response, we expanded the MOFX model, a key innovation in AutoFX, which provides optimised, harmonised, transparent execution coupled with competitive FX rates and settlement across different global custodians.
“This fully automated FX solution allows the asset manager to focus on their investment strategy, knowing their FX needs and requirements are automatically taken care of. Foreign exchange plays a key role in executing successful trades and, as such, we are already seeing significant appetite among our buy-side clients for this new solution.”
Commenting on the partnership, Sean Cunningham, Head of Investment Operations at Northcape Capital, said: “As an investor on behalf of funds and mandates, our focus was on ensuring we were providing the best result for our clients. The efficiencies realised with this new operational infrastructure saw a reduction in FX execution lag and an added degree of transparency in the granularity of transactional data received.
“We have been pleased with the implementation of the service given it spanned multiple custodians and global locations. We continue to be encouraged by the results of the programme and are optimistic for its future in our operation.”
BNP Paribas Securities Services offers a range of FX services, including automated FX, ‘upon request’ rates from any of its trading desks worldwide, and passive currency overlay services where BNP Paribas uses FX to hedge clients’ foreign currency risk.
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About BNP Paribas Securities Services (securities.cib.bnpparibas)
BNP Paribas Securities Services, a wholly owned subsidiary of the BNP Paribas Group, is a leading global custodian and securities services provider. Backed by the strength of the BNP Paribas Group, we provide multi-asset post-trade and asset servicing solutions for buy and sell-side market participants, corporates and issuers. With a global reach covering 90+ markets, our network is one of the most extensive in the industry, enabling clients to maximise their investment opportunities worldwide.
About Northcape Capital (northcape.com.au)
Northcape Capital is an Australian based boutique fund manager fully owned by its staff. Specialising in managing concentrated high-quality equity portfolios for clients, its product range includes Australian Equities, Emerging Market Equities and Global Equities. Northcape has delivered significant value-added returns since its establishment in 2004 which has facilitated growth in funds under management to more than A$13 billion.
The information contained within this document (‘information’) is believed to be reliable but BNP Paribas Securities Services does not warrant its completeness or accuracy. Opinions and estimates contained herein constitute BNP Paribas Securities Services’ judgment and are subject to change without notice. BNP Paribas Securities Services and its subsidiaries shall not be liable for any errors, omissions or opinions contained within this document. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. For the avoidance of doubt, any information contained within this document will not form an agreement between parties. Additional information is available on request.
BNP Paribas Securities Services is incorporated in France as a Partnership Limited by Shares and is authorised and supervised by the European Central Bank (ECB), the ACPR (Autorité de Contrôle Prudentiel et de Résolution) and the AMF (Autorité des Marchés Financiers).
In the UK, BNP Paribas Securities Services is authorised and regulated by the European Central Bank and the Autorité de Contrôle Prudentiel et de Résolution. Deemed authorised by the Prudential Regulation Authority and with deemed variation of permission. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website. BNP Paribas Securities Services London Branch is registered in the UK under number FC023666. UK establishment number: BR006393. UK establishment office address: 10 Harewood Avenue, London NW1 6AA.
In the U.S., BNP Paribas Securities Services is a business line of BNP Paribas which is incorporated in France with limited liability. Services provided under this business line, including the services described in this document, if offered in the U.S., are offered through BNP Paribas acting through its New York Branch (which is duly authorised and licensed by the State of New York Department of Financial Services) or BNP Paribas Financial Services LLC, a limited liability company organised under the laws of the State of Delaware; if a securities product, through BNP Paribas Securities Corp. which is a broker-dealer registered with the Securities and Exchange Commission and a member of SIPC and the Financial Industry Regulatory Authority; or if a futures product through BNP Paribas Securities Corp., a Futures Commission Merchant registered with the Commodities Futures Trading Commission and a member of the National Futures Association.