NatWest has announced a new passive currency hedging service to add to its suite of foreign exchange products offered to institutional investors. The bank stands unique in terms of bringing together end-to end-automation and acting as an Agency FX provider, trading on behalf of clients and providing greater execution transparency.
In an innovative partnership with Lumint Corporation, a US-based fintech specialising in currency management services, NatWest will provide automated administration of passive currency hedging programmes including share class, portfolio, look-through and index replication strategies, supported with real time performance attribution and reporting.
Best execution and increased visibility
Lumint’s software gives NatWest the ability to operate highly complicated passive currency hedging mandates, supported by the automation of data processing and system integration into both NatWest’s Agency FX and principal market making execution services. By combining these tools, NatWest will bring transparency and clarity to services that are often challenging for customers. With TCA (Transaction Cost Analysis) from New Change, NatWest Market’s Agency FX offering gives clients a powerful new choice in their pursuit of better FX execution.
Previously, most clients were unable to review costs and charges associated with the FX hedging transactions with their custodian banks. NatWest seeks to offer clients a solution that removes any opportunity for price discrimination with their existing service providers and focuses on providing maximum transparency during their FX execution cycle.
Reducing exposure at optimal efficiency
Passive currency hedging aims to reduce or remove currency exposure over a pool of assets caused by exposure to international assets and fluctuating currency rates. It is an essential tool for any institutional investor who has foreign assets and hedges currency exposure, which until now, has been a very manual and time-consuming process. The service will also allow clients to benefit from both enhanced operational cost savings and to reduce any associated operational inefficiencies.
Nick Pedersen, Head of Digital, NatWest Markets, said: “We are thrilled to be one of the first banks to combine agency and principal execution solutions with passive currency overlay. Our partnership with an emerging fintech like Lumint allows us to tailor technology solutions and remove FX hedging challenges for our customers.”
Alex Dunegan, CEO of Lumint, said, “The Lumint team is very excited to be working with such a respected organization, and to be a part of NatWest’s effort to continuously offer innovative services to their clients.”
Notes to Editors:
NatWest Markets helps corporate and institutional customers manage their financial risks and achieve their short- and long-term financial goals while navigating changing markets and regulation. Our products and solutions are centred around three pillars: Rates, Currencies and Financing. We have developed digital self-service applications covering FX, rates, risk management, international payments and many more services. Our strategists and content experts across Currencies, Risk and Financing offer fresh thinking alongside market-leading economic insights in the key economies where our customers do business. We operate from trading hubs in London, Amsterdam, Singapore and Stamford with sales offices across key locations in the UK, EU, US and Asia.
Based in Boston, Lumint is a privately held corporation founded in 2014 to provide comprehensive currency management services and software to institutional investors and banks by delivering process excellence, scalability and real time performance analytics through a highly automated proprietary platform.