Deutsche Bank and BNY Mellon have jointly developed a new API-enabled foreign-exchange (FX) solution, capable of improving confirmation times for restricted emerging-market currency trades.
The new digital solution is planned to be initially applied for custody FX transactions in Korean Won, and is aimed at reducing the pre-trade lifecycle from hours to seconds, addressing the operational burden and manual intervention in the emerging-market custody FX.
Deutsche Bank APAC fixed income and currencies, and corporate bank head David Lynne said: “This is a milestone in solving a long-standing challenge in emerging markets, with broad application for the industry and our clients.
“This demonstrates our commitment to market leading execution, at a time when investor participation and focus on costs in these markets are increasing. The collaboration between the two organizations leverages our strengths and expertise in emerging markets, custodial FX, as well as digital work-flow and innovation.”
Deutsche Bank and BNY Mellon has already implemented the new Custody FX solution in Korea
The new FX solution has already been implemented in Korea, with plans to further expand targeting the Indonesian Rupiah and the Indian Rupee.
In addition, the service will be rolled out to a wide range of restricted currencies, which are linked to underlying equity or fixed-income transactions of investors.
The new Custody FX solution is capable of bringing the trade remediation closer to the time of execution by leveraging existing bots between the two banks for instantaneous communication to eliminate market frictions.
The resulting benefits include reduction is price slippage for clients between the FX leg of a transaction and the equity or fixed-income security trade.
BNY Mellon FX global head Jason Vitale said: “We are constantly looking at ways to introduce cutting-edge technology for the benefit of our clients.
“With this partnership, we are not only seizing an opportunity to alter back-office processing in restricted markets, but more importantly, we are providing front-office users with faster execution and enhanced workflow transparency.”
