Interview with Shuo Wu, the Globe's Leader in Forward eTrading FX
In an effort to improve client experience and navigate the evolving derivatives market, a leading bank is introducing new technologies and products to its product range. The innovations include elastic orders, elastic swap orders, and flexible futures.
The bank has faced key challenges over the past year, centred on regulatory changes, currency volatility, and the integration of new technologies. Regulatory changes have included stricter scrutiny on derivatives and virtual asset service providers (VASPs), with authorities like the FATF emphasizing enhanced anti-money laundering (AML) and counter-terrorism financing (CFT) compliance, particularly regarding stablecoins and decentralized finance (DeFi) risks.
Meanwhile, currency volatility remains a critical risk driver for forwards and swaps, exacerbated by macroeconomic pressures like rising longer-term yields and financial system vulnerabilities. To combat this, the bank is developing innovative tools such as volatility control indexes and advanced scenario testing, allowing firms to better hedge risks and stabilize investment performance amid uncertain currency and rate environments.
On the technology and client experience front, the bank is adopting blockchain-based solutions in payments and foreign exchange derivatives servicing. The introduction of payment stablecoins, encouraged by recent legislation such as the GENIUS Act in the U.S., aims to enhance settlement efficiency and liquidity access in currency swaps. However, this also raises concerns for systemic risk.
The bank has invested significantly in its forwards and swaps technology over the past year. The new technologies, including elastic orders and flexible futures, are designed to move trade off the balance sheet and offer full flexibility to clients, enabling them to work in their interest against both peers and the bank's principal desk.
The bank's focus on client-centricity extends to its investments in technology for its forwards and swaps products. The bank's forwards and swaps technologies have been built with client-centricity in mind, aiming to offer robust and reliable solutions to its clients as a result of strong relationships and open dialogue. These technologies have been designed to lay even stronger foundations for the next generation of its client offering.
In summary, the bank's new technologies and products are a response to the complex environment of tightened regulations impacting AML and digital asset integration, heightened currency volatility demanding sophisticated risk tools, and technological advances—especially AI and blockchain—that enhance client service but require careful regulatory and operational oversight. These innovations are set to reshape how the bank structures, prices, and manages forwards and swaps for its clients.
The bank is integrating new technologies in its business operations to improve client experience, especially in the derivatives market, which includes the introduction of elastic orders, elastic swap orders, and flexible futures. In addition, the bank is strategically investing in its technology for forwards and swaps products, focusing on client-centric solutions like payment stablecoins and blockchain-based solutions, to enhance settlement efficiency and liquidity access while providing robust and reliable services.
