FX TRANSACTION COST
Regardless of the reasons for conducting an FX transaction, the responsibility to achieve a fair price sits on the buy-side of the market.
Currency transactions are classified as "over-the-counter" and as such are not regulated by any centralized governing body. It's a classic case of "buyer beware."
Furthermore, in the current marketplace custody banks and alternative FX providers have explicitly stated that they view foreign exchange as a profit center.
Drawing on extensive experience in foreign exchange markets, Klarity FX helps buy-side clients, such as Retirement Systems & Endowments, Investment Consultants, and Fund Managers, measure monitor and manage the execution of currency related transactions.
- Conducting FX Transaction Cost Analysis (TCA) is the first step in measuring the true cost of foreign exchange related costs being passed along from the Custodian to Investment Fund Managers to the Retirement System or Endowment.
- Custodian banks and FX brokers have an inherent conflict of interest in delivering best execution, as foreign exchange operates as a profit center at these institutions. Spreads charged by custodian organizations can differ significantly from what is considered best practice.
- Custodian organizations often hide or obfuscate actual transaction execution details, as a part of "bundled" offerings.
- Regular ongoing monitoring ensures that best execution, once achieved, is maintained.
- Klarity's FX Transaction Cost Analysis (TCA) provides a consistent, reliable way to compare an Investment Fund Manager's performance against "industry best practices".
- Utilizing Klarity's forensic statistically sampling and analysis capabilities, Investment Consultants are better positioned to assess a Fund Manager's ability to execute foreign exchange transactions in a cost and price competitive manner.
- Klarity also allows the Consultant to conduct appropriate comparative analyses to determine if alternative processing approaches might result in lower overall processing costs, and enhanced Fund performance, thereby ultimately benefiting Retirement Systems.
- Regular ongoing monitoring ensures that proper competitive pricing, and therefore lower fees, are maintained.
- Klarity's FX Transaction Cost Analysis (TCA) provides a transparent way to measure and analyze pricing of foreign exchange transactions.
- Investment Consultants, at the direction of Retirement System Administrators, are increasingly requiring proof of cost competitiveness in foreign exchange transactions.
- Inclusion of Klarity's TCA analytics in Fund performance metrics provides Fund Managers with evidence they are diligently and professionally managing all aspects of the relationship.
- Regular ongoing monitoring ensures that proper competitive pricing, and therefore lower fees, are maintained.
Klarity FX, Inc.
220 Sansome Street
Suite 980
San Francisco, CA 94104
+1 415-678-2888
info@klarityfx.com
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