BNP launches carry trade alternative

BNP Paribas has launched two new FX indexes, Galaxy Alpha and Alpha plus, which aim to offer an alternative to traditional carry trade strategies, which have underperformed over the past year given extreme volatility in FX and interest rate markets.

The indexes seek to extract outperformance between a dynamic basket, which is selected every month based on the currencies with the highest interest rate differentials, and a fixed benchmark basket of traditional currency pairs. The dynamic basket selects the five high yielding and low yielding currencies with the highest interest rate differentials. It then excludes all currencies with consistent or noticeable adverse spot movements over the last month. The currencies that are left are paired

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Stemming the tide of rising FX settlement risk

As the trading of emerging markets currencies gathers pace and broader uncertainty sweeps across financial markets, CLS is exploring alternative services designed to mitigate settlement risk for the FX market

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