Use of the domestic CNY needs to be validated against underlying portfolio requirements. Beyond a fund’s custodian, it is hard to do this in a robust, efficient and compliant fashion, hence funds currently find themselves stuck between a rock and a hard place: persist with CNH but incur higher hedging costs and tracking risk, or switch to CNY and lose the opportunity for price competition.
ChinaFICC has built an innovative FX trade execution and reporting system, that pre-validates the use of CNY to unlock price competition, whilst providing a host of order routing and optimisation features to make execution efficient, effective and compliant.
ChinaFICC calculates it can return between 15-40 bps of fund performance to China dedicated funds. Once the CNY has been solved for, ChinaFICC intends to extend its model across other restricted currencies.