Let Your Clients Choose Their Preferred Currency
M-DAQ enables you and your clients to price, trade and settle exchange-traded products in their preferred currency of choice, without fragmentation in the underlying security liquidity pool.
“Multi-denomination Automated Quotation (M-DAQ®), is a Game Changer that aims to create a World without Currency Borders® insofar as to enable listed securities to be tracked, traded and settled in the investor’s local currency rather than the currency of the Securities Exchange. ”
E-Forex, Jan 2012
Impact of FX on Security Prices
Currency movement has significant impact on investment returns when buying and selling foreign securities. Presently, FX rates are unknown at the point of trade execution, and fluctuation in FX prices can greatly reduce or erode investment returns.
The sample graphs illustrate pre and post M-DAQ scenarios where buying and selling signals (i.e. "buy low" and "sell high" points) are vastly different when analysed in the respective investment currency. Although these graphs uses a one-year time period, the same is observed for all other time intervals including intra-day for all currencies.
This example clearly demonstrates that exchange rates volatility increases uncertainty and complexity for an investor making cross border securities trades. The analysis of the same security over the same time period looks very different with currency overlay on top of it.
By shifting FX conversion to the point when the trade is executed and performing it at the Exchange level rather at the broker level, we believe you can trade with more certainty and confidence and receive better fills for your cross-border trades.
"MTR" Stock (Present) Original Currency (HKD)
Using present day chart, March would be the time to buy when share price is lowest and October to sell when share price peaks.
"MTR" Stock (Future*) Choice Currency (AUD)
Future graph that is yet to exist in any of the world-wide exchanges today
Instead of buying opportunity only in March, it stretches from February to May under the new paradigm. The ideal profit taking timing would be in August rather than October.
Differentiate as a Leader
Early adopters will be able to differentiate themselves from peers and grow market share in an innovative and unique solution.
Offer Best FX Execution
Promote FX on an effective “Best Execution” basis (via access to interbank pricing of top 10 global liquidity providers) at a point in time when clients, both institutional and retail, are focusing on overall costs of execution.
Levels the playing field with global brokerage houses and allows better competition for offshore institutional flows, in particular hedge fund an risk arbitrage activity.
Increase Market Share
With stock prices qouted in different currencies, more participation can be expected from foreign investors resulting in a sustainable increase in brokerage fees revenue.
Achieving Competitive FX Pricing
Our FX prices are derived from the world’s Top FX Banks. According to Euromoney FX Survey, the top 10 FX banks account for nearly 80% of the global FX liquidity around the clock.
This new “Effective Supply Pricing” is superior to traditional “last executed pricing”; with consistent market depth in excess of USD250 million at all times.
Source: Euromoney FX Survey
How M-DAQ can help your performance
For example, an US-based fund may typically hold these international stocks with USD as its portfolio currency.
Current Scenario (Post Trade FX)
Foreign securities in a portfolios are quoted and tracked in each foreign security’s native currency.
Investors often trade with unknown and high FX conversion cost.
Potential suboptimal entry and exit investment decisions due to FX fluctuation.
With M-DAQ Solution (Pre FX)
Foreign securities in a portfolio can be priced and tracked real-time in the investors’ base currency.
Elimination of profit erosion due to uncertainty in FX rates during trading.
Investors, regardless of profile or trade size, can benefit from a multibank FX wholesale price.