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FX Transaction Cost Analysis



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 helps buy-side clients, such as Retirement Systems & Endowments, Investment Consultants, and Fund Managers, achieve competitive pricing and best execution of currency related transactions.

Retirement Systems
& Endowments
Investment
Consultants
Investment Fund
Managers
  • 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.
Key Benefits
  • Protection in an unregulated market
  • Satisfy fiduciary responsibilities
  • Benchmark FX trading costs
  • Simple implementation
  • Effective & low cost solutions
  • Reduce trading costs


  • spread income
  • transparency
  • counterparty performance
  • peer comparison
  • best execution analysis
  • behavioral analysis
  • fee breakdown
  • standing instructions
  • day range
  • liquidity
  • benchmarking
  • fx transaction costs
  • foreign exchange
  • retirement systems
  • board trustees
  • defined benefit plans
  • plan sponsors
  • investement officers
  • international investements
  • investement consultants
  • MEASURE
  • MONITOR
  • MANAGE

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