MillTechFX brings cost-effective FX execution and hedging to Europe

Rick Steves

The company has launched the margin-free foreign exchange (FX) hedging solution in partnership with Investec Bank. The firms have come up with a solution that allows managers not to have their AUM held back to meet a margin call.

MillTechFX has expanded into Europe, having selected Paris for its European hub. The firm is now ready to hit the ground running across the EU after receiving regulatory approval from both French financial authorities – the Financial Markets Authority (AMF) and the Prudential and Resolution Control Authority (ACPR).

The FinTech affiliate of Millennium Global Investments announced the move following the success of its multi-bank foreign exchange (FX) marketplace in the UK and North America, with trading volumes in the tens of billions of US dollars.

FX execution and hedging taken to another level

The FX marketplace targets asset managers and corporates who look to reduce costs in their currency execution and hedging requirements. MillTechFX also eases the operational burden of implementing and managing multiple relationships to seek best execution.

Its multi-bank FX marketplace allows institutional clients to reduce both FX costs and the operational burden associated with FX execution and rolling hedging requirements with an independent end-to-end currency solution that provides direct access to wholesale FX rates from up to 10+ counterparty banks and transparent best execution.

Eric Huttman, CEO of MillTechFX, said: “Over the past 12 months we have seen terrific growth in terms of clients onboarded and volumes transacted on our FX marketplace. This success indicates that asset managers and corporate treasurers are actively moving away from traditional FX processes and partnerships in favour of cost-effective, efficient and transparent multi-bank solutions. As a firm with global ambitions, we look forward to extending the benefits of our marketplace to European corporates and asset managers via our hub in Paris.”

Stephanie Aufan, Directeur Général of MillTechFX Europe, said: “Paris is one of the top tech cities in Europe, boasting a deep pool of talent as well as excellent transport links to London and the rest of Europe. From our Paris hub, we will open the door to more transparent, efficient and cost-effective access to multi-bank FX execution, levelling the playing field for asset managers and corporates across Europe.”

Earlier this month, MillTechFX announced the appointment of ex-HSBC chief executive Stuart Gulliver to its International Advisory Board. His wide experience in international finance will help the fintech continue its rapid growth and execute its global expansion plans.

Stuart Gulliver is an industry veteran and leader who joined HSBC in 1980 and only retired from the bank after 38 years. During that time, he went on to lead the HSBC Group worldwide, serving as both Chairman of The Hong Kong and Shanghai Banking Corporation Limited and CEO of the HSBC Group from 2011 to 2018.

Stuart Gulliver joins Sir Ronald Cohen, Vikram Gandhi, and Chairman Alan Eisner on the international advisory board of Millennium Global’s subsidiary.

MillTechFX executes $760bn in annual FX volume and manages over $19.5bn in institutional currency mandates. The firm offers a cost-effective FX execution and hedging solution for corporate treasurers and asset managers.

The company has recently launched the margin-free foreign exchange (FX) hedging solution in partnership with Investec Bank. MillTechFX and Investec have come up with a solution that allows managers not to have their AUM held back to meet a margin call.

The new margin-free hedging solution solves this issue by removing the need for fund managers to post initial and/or variation margin. The platform frees up cash to invest more capital and to increase operational efficiency and doesn’t jeopardize best execution.

Average investment lifecycles for private debt funds last one to five years, and private equity fund terms are closer to ten. This poses a long-term exposure to currency risk, usually hedged at the fund or share class level by the manager using FX forward contracts.

FX forward contracts, however, have their downside for alternative investment managers: many banks request collateral to be posted upfront (initial margin) and on an ongoing basis (variation margin), leading to a cash drag on the funds.

 

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