How can you find out your FX execution costs?

Despite businesses regularly transacting in FX, many have poor visibility on what the costs of these transactions are and suffer from hidden charges. These include costs hidden in the spread, better pricing for larger participants and an inability to compare the market, as covered in our ‘What are the hidden costs in FX?’ blog earlier in the series.

Recently though, there has been a steep change regarding the demand for pricing transparency in FX. As firms strive to increase efficiency, they are also trying to get to the bottom of their FX execution costs with the aim of saving money and demonstrating strong governance to internal stakeholders.

But what is the best way to get visibility on execution costs?

Achieving pricing transparency

TCA and its benefits

The answer is simple: Transaction Cost Analysis (TCA).

• TCA enables firms to understand how much they are being charged for the execution of their FX transactions.
• An independent TCA will compare your executed price against the actual mid-market rate [MID]. It will also demonstrate the total trade slippage as a means of evidencing both explicit and implicit costs.
• It goes hand in hand with best execution, serving as an ongoing audit of FX practices within a firm’s currency execution function as a demonstration of good governance.
• A TCA does more than simply safeguard transparency. It allows for ongoing comparison of the quality of execution against the wider market and demonstrates Best Execution.
• Ongoing, quarterly TCA from an independent TCA provider can be embedded as a new operational practice to ensure consistent FX execution performance.

Multi-bank marketplace with TCA embedded

• Multi-bank marketplaces, like MillTechFX, have TCA embedded and so provide independent transparency that’s historically only been available to the largest market participants.
• They also go a step further. By providing access to a single interface with live rates from multiple banks, FX marketplaces enable asset managers and corporate treasurers to compare the market and execute at the best rate.
• This is a step forward in innovation, as it seeks to increase transparency, streamline operations and save money.

Take the next step towards getting more transparency on your hidden FX execution costs.

Fill out this form today for a free TCA.