TheHubwiseDifference - unleash your multi-currency strategy

Jul 7, 2020 10:44:15 PM

With Hubwise, multi-currency is at our core, with the technology initially developed to operate as the single trade booking platform for one of the world's largest retail FX brokers, processing all their cash equity, FX, CFD and complex derivative trades.

Our experience with a number of established IFA and DFM businesses across the UK has highlighted a common and frustrating investment constraint on most other retail platforms - the ability to invest clients into funds or securities priced in a non-GBP currency, such as USD, EUR or other currencies.

The multi-currency features of our platform can enable many new investment opportunities which historically have been the preserve of institutional money managers, including the following: 

Mixed Currency Portfolios

The Hubwise platform is whole-of-market in terms of investment choice. As well as providing access to all UK and European share classes and all UK listed securities, the platform supports electronic execution in a wide range of international securities listed on overseas exchanges - covers the main markets across North America, Europe and Asia-Pacific.

To complement our global investment universe, managed portfolios can be constructed combining assets with a mix of different settlement currencies, as well as combining multiple asset classes in the same model (including funds, equities, ETFs and AIM stocks). Our experience shows the most demand for investments with settlement currencies of USD and EUR, but Hubwise can support up to 26 different settlement currencies.  

To illustrate our automated FX capabilities, let's consider two simple investment scenarios (noting that the platform uses Invest/Raise orders for instructions by cash value, and Buy/Sell orders for instructions by number of shares/units):

  1. An instruction to Invest or Raise a specific cash value into/from the portfolio comprising assets with a mix of settlement currencies
    - at the point of order placement, the platform will automatically execute FX trades to convert the Invest or Raise order values into each market settlement currency and then place the orders in the market.
  2. An instruction to Buy or Sell a number of shares/units in an asset with a settlement currency different to the portfolio base currency
    - at the point the execution price is confirmed by the market, the platform will then automatically execute the FX trade to settle in the correct currency.  

Currency symbols carrying the world with a chain isolated on whiteClients Holding Other Currencies

The Hubwise platform can help your wealth business to serve a UK expat client base, by enabling your clients to invest using their USD, EUR or other currency cash positions.

These local currency cash positions can be invested into the respective currency investments on the platform without the need for FX trades (e.g. client investing USD cash into a portfolio of ETFs settling in USD), or the local currency cash position invested into a mixed/different currency portfolio with the relevant FX trades automatically processed by the platform.

Client Valuation Reporting

Each client record on the platform is associated with a base currency, which is typically GBP for most business in the UK. But this could be USD, EUR or another supported currency, to address specific client requirements.

When investments are reported to the client, usually on a quarterly basis, the valuation will report all positions in the client's base currency. The market values of any investments held and priced in other currencies will be automatically converted into the client's base currency using the appropriate FX rates.

Existing Market Constraints

For the majority of retail investment platforms, multi-currency is simply providing access to international shares traded and settled in the UK as CREST Depository Interest (CDI) instruments. 

The main advantage of the CDI is simply to make settlement and custody easier for international securities, with platforms and their custodians able to use the CREST settlement infrastructure as they would for UK listed securities, thereby processing all trades in sterling.

There are two main disadvantages of this model - there are only a limited number of international securities available as CDIs; and the quoted price for the CDI security will not be the same as the price available on the relevant overseas exchange.

Hubwise understands multi-currency. Let us help you to fully exploit your global investment strategy and join our growing community of progressive investment firms taking advantage of this capability, including Frenkel Topping, SCM Direct, Smith & Pinching and Clifton Asset Management. 

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