Allowing Investors To Trade In Their Preferred Currency

M-DAQ enables investors to price, trade and settle exchange-traded products in their preferred currency of choice, with live pricing streamed via top 10 FX liquidity providers.

 

Improved
Global Access

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.

Remove Uncertainty
of FX costs

Live streaming executable securities prices in your preferred currency, allows investors to better able to “seize market opportunities” with no need to “price in” additional post trade FX costs.

Trade in One
Preferred Currency

M-DAQ facilitates inbound and outbound flows using the preferred currency of choice; for e.g. Australian investors can trade off-shore securities in AUD whilst enabling off-shore investors to trade Australian securities in foreign currencies.

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)

present_graph

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

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.

How Investors Can Receive Competitive & Transparent FX Pricing?

The best bid and offer from each FX bank on the M-DAQ panel is commingled to manufacture M-DAQ FX rate. As each bank is contributing their most competitive rate into the M-DAQ ecosystem, it is not unusual to produce a choice price.

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

FX Rates – Non Transparent and Not Neutral

Major lawsuits related to unfavourable FX rates

  • NY Attorney General vs BNY Mellon (Oct 2011)
    The New York’s Attorney general alleged that BNY Mellon collected nearly $2 billion in profit by fraudulently charging pension funds with the worst FX rates.

  • CalPERS vs State Street (Oct 2009)
    State Street is accused of overcharging CalPERS, the second largest pension fun in the US, by at least $56.6 million through a series of FX trades over 8 years.