Sumitomo Mitsui Trust Asset Management, one of the largest asset managers in Japan and Asia, with AUM of JPY 87.0667 trillion, has adopted Bloomberg Rule Builder, a multi-asset, rules-based trade automation tool, to enhance the efficiency and productivity of trading services for FX and fixed income trading.
The firm will utilise Rule Builder through Bloomberg’s TSOX Fixed Income and Derivatives Execution Management System, and its multi-bank FX trading system, FXGO. The tool will enable the firm’s traders to execute orders according to their pre-established rules, and allow for optimal execution at traders’ desired timing.
“In the world of over-the-counter trading, executing a large number of orders with limited staff takes time,” says Yosuke Hosokawa, Deputy General Manager of the trading department at Sumitomo Mitsui Trust Asset Management. “With the automation of sell-side pricing progressing further ahead, we have been considering the possibility of reducing timing risk by also automating buy-side execution. By using Bloomberg Rule Builder (RBLD), it’s become possible to automate the execution of purchases at desired times, resulting in significant cost savings. In addition, the process of setting Rule Builder parameters has made the overall execution process more transparent. The insights gained through this increased transparency are then reflected in these parameters as part of a cycle that enables further improvement of the execution process by a trader. As such, investors will be pleased to know that we are achieving quality performance under optimal execution policies and that there is a rigorous process in place.”
“The buyside has undergone a drastic evolution in the past few years and demand for automation is increasing due to the ever-changing regulation, reduction in fees and growing cost pressures,” says Norman Tweeboom, Japan Regional Head at Bloomberg. “Each buy-side customer has their own trading guidelines and best execution rules, so they need a solution that enables them to enter these requirements, which can then be reflected in their automated trading rules. Rule Builder provides the flexibility to automate trades directly on the Terminal. Customers can create, add, or modify rules intraday using a number of criteria to ensure they meet their trading guidelines and internal rules. Rules commonly used by clients include the instrument type they want to be auto-executed, size limitations, preferred brokers lists, minimum number of broker quote responses needed to execute, etc.”
The Rule Builder also helps reduce operational errors, says Tweeboom. “Firms are able to help minimise potential errors from manual trade execution when orders are auto-routed,” he says. “Rule Builder allows clients to codify their best execution parameters and it will only execute it if these parameters are met. Further it allows clients to segment orders into different categories and apply different workflows, such as full automation, or one click automation where the trader decides if the order should be routed for auto execution.”
Using a solution that is integrated with the full trading workflow helps optimise the automated trading process, and ensures that firms are leveraging the efficiency of end-to-end electronic trading, adds Tweeboom. “When used together with an OMS such as Bloomberg AIM, Bloomberg’s execution management systems, and solutions such as BTCA, a multi-asset transaction cost analysis offering, automation can help ensure compliance with best execution requirements while saving traders’ time. Once clients are integrated there is no additional integration work required to use Rule Builder. When utilized together with other integrated solutions, customers can achieve seamless, integrated workflow throughout the trade life cycle. This brings both operational efficiency and cost benefits.”
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