Driving growth of FX services in Apac: HSBC

With international clients seeking to access Asia-Pacific (Apac)-restricted markets, and local market participants wishing to expand their operations, HSBC has become a key provider of global FX services in this fast-growing region

Over the past few years, HSBC has seen significant growth in the demand for FX services in the Apac region, particularly from firms located or doing business in the region’s restricted markets. This growth is driven by market participants seeking to automate their workflows and achieve greater efficiencies in their daily FX operations. As a leading FX bank in Apac, HSBC services many participants who want to embark on the next step of their journeys.

“We’ve seen strong demand for FX services across Apac, particularly in Hong Kong and Singapore, but also across various restricted currency markets,” says Vincent Bonamy, head of global intermediary services at HSBC. “This has led to strong demand for our automated FX risk management services from our clients – especially from asset owners, asset managers and, more recently, medium to large corporate clients.”

This greater demand is due to a growing class of firms that have increased to a size where a rethink of their FX workflows and operations is required to remain competitive. For many, the business workflow and infrastructure setups that served them well as they were growing are no longer sustainable and new solutions are needed.

“When market participants start to play the scale game, automation of the risk management lifecycle becomes a must,” points out Bonamy. “At stake here is the need for greater efficiencies in their processes to keep up with their competitors. They need best-in-class protocols, such as best execution in place to stay ahead of competition in the market. This is where we at HSBC can help our clients leverage their capabilities by automating their workflows and achieving greater scalability.”

FX overlay requirements growing across Apac

Market participants that come to HSBC for FX overlay services do not place currency management as a central component of their activities. They come for guidance on how to optimise the hedging of their FX positions. As such, HSBC provides a full service to manage their FX flows, but the clients set the hedging parameters and remain in full control at every step of the process. They receive comprehensive analytics about their positions before, at and post trade, which provides a live view of exactly how their FX risk management is being implemented.

“We have a digital cockpit where clients can see what is happening to their FX positions in real time, and how their chosen parameters are applied to their most current risk exposures and cashflows,” says Bonamy. “We provide our clients with the best of both worlds: they get the simplicity and efficiencies from automation but, at the same time, are in full control of how it is done. Transparency is key.”

HSBC is keen to develop solutions that cater to the needs of international clients seeking to access Asia’s restricted markets – its fastest-growing region for FX services – and global, as well as domestic, asset managers wishing to adopt best practices.

“Asia is a thriving market for us,” says Bonamy. “With mandates growing from small sizes or only seed money a few years ago, to currency mandates in the billions of dollars today, we believe there is still a lot of demand in the market in Apac, especially from international asset managers wanting to set up local currency feeder funds in Asia and local asset managers wanting to go abroad. We are working very hard to support our clients in implementing the right FX solutions.”

CNH leading algorithmic execution growth

Algorithms have become an increasingly popular instrument through which HSBC clients can maximise the efficiency of their FX trading, particularly when liquidity in the market is especially thin and they need to execute large trades with minimal disruption. In 2024, this translated to algo volume growth of more than 50% in Apac – largely due to the use of algos by hedge funds and sovereign wealth clients.

While well-established algos such as non-deliverable forwards (NDFs) have been extremely popular, HSBC prides itself on being a key player in bringing new algos onto the market. In 2024, the bank rolled out a basket algo, which allows clients to execute a portfolio of orders that, when correlated, netted and optimised, can significantly reduce risk and minimise market footprint at execution.

Asian corporates have also been especially active in the use of algos, particularly…