MillTechFX and Investec Bank plc launch new FX solution
MillTechFX has partnered with Investec Bank plc to provide fund managers with an innovative margin-free foreign exchange (FX) hedging solution.
6 December 2022
Against the backdrop of increasingly rapid climate change and pressure from investors and consumers, Environmental, Social and Governance (ESG) factors are now at the very heart of the decision-making process for many businesses.
More than three-quarters of investors think that companies should make investments that address ESG issues relevant to their business, even if it reduces profits in the short term. Likewise, a recent survey from PwC found ESG funds are expected to exceed conventional funds by 2025.
The movement is playing an increasingly important role in FX. According to MillTechFX’s own 2022 fund manager FX report, 58% of fund managers surveyed said that their FX counterparties must have strong ESG credentials while 36% said that it was an important consideration.
As a result of this growing policy and regulatory momentum, we believe ESG is now a fundamental precept of investing and forms a core component of firms’ operating practices
At MillTechFX, we are strongly committed to our own ESG responsibilities and reducing our carbon footprint, ensuring that our business practices align with internationally recognised standards such as the Principles for Responsible Investment (PRI). In 2021 we focused on reducing emissions from our group wide technology. For our remaining emissions we offset 60.45 tonnes of Carbon Dioxide: an important milestone in reaching our longer-term goal of cutting our group-wide carbon footprint by 30% between 2021-2024.
We are proud to be supporting the Pacajai REDD+ Project in Brazil. The project’s main aim is to prevent and avoid unplanned deforestation in native forests, avoiding the net emission of 264.116tCO2e for a period of 40 years. Its plan includes rigorous monitoring, involving the local community & local settlers, who are receiving extensive training in forest management techniques.
The project has been certified with Verra's prestigious Climate, Community & Biodiversity (CCB) standard, which is a testament to its strong positive social, environmental, and economic impacts.
MillTechFX’s support for Pacajai REDD+ will contribute to the project’s growing efforts towards achieving inclusive community forest management as well as biodiversity objectives. These include:
In addition to supporting the first two letters of the acronym, our FX-as-a-Service model is also helping clients establish strong governance.
In our view, strong governance in areas such as regulatory compliance, transparency and implementation of industry best practices must form a central element of any business seeking to be a good corporate citizen. Therefore, we are a proud signatory of the FX Global Code and continue to implement best practices to enable our customers to achieve best execution with full transparency with our automated FX solutions.
Firstly, we allow our clients, many of whom rely on a single bank or broker for execution, to compare institutional-grade rates from more than ten counterparties. While firms traditionally tend to only work with a small number of counterparties for their FX due to the operational complexity of setting up multiple banking relationships, our multi-bank marketplace offers an unprecedented level of price competition. This gives our clients a far more transparent view of the market.
Secondly, our independent transaction cost analysis (TCA) helps clients to assess the broader quality of execution and establish greater cost oversight. Transaction costs can be hidden in the FX spread, typically calculated as the difference between the traded rate at the point of execution and the mid-market rate at that time. Our independent TCA enables clients to understand how much they are being charged for the execution of their FX transaction, ensuring cost transparency.
As clients and investors become increasingly driven by ESG criteria, it is crucial that the industry supports the right initiatives and puts the correct processes in place to meet this demand. Get in touch here to find out how we can help you meet your ESG criteria.