A global leader in online multi-asset trading services and currency data and analytics, OANDA has partnered with the prestigious Fields Institute for Research in Mathematical Sciences to identify ways to reduce the cost of trading during periods of high market volatility. The partnership aims to provide more accurate foreign exchange volatility predictions, enabling OANDA to better hedge their positions and manage risk, resulting in tighter spreads for clients, especially during critical market events.
Conducted at a recent Fields-China Industrial Problem-Solving Workshop in Shanghai, phase one of this partnership examined the relationship between volatility regimes, market events, and changes in volume. In particular, the study aimed to provide insights into the dynamics of FX volatility and the reaction to known market events, because knowledge of both the emergent patterns and future state of volatility can improve hedge effectiveness, adding value to client offerings.
Neil McDonald, OANDA's Head of Trading, said, "While OANDA has long been committed to tight spreads and transparent pricing, the markets can experience extreme volatility at times, which obviously impacts the prices we quote. As a result, we're pleased to work with The Fields Institute to identify ways we can better predict market volatility, with a view to enabling us to offer the tightest spreads possible and reduce the cost of trading on our institutional-grade platform, even during major events."
In the coming months, OANDA will further build on their relationship with the Fields Institute, partnering with Matheus Grasselli and Thomas Hurd of McMaster University, and Sebastian Jaimungal of the University of Toronto to establish a new Systemic Risk Analytics lab as part of the Institute’s Centre for Quantitative Analysis and Modelling (Fields-CQAM). Director of CQAM, Huaxiong Huang, said, “Fields-CQAM collaborates with innovative companies to utilize mathematical research to benefit the private and public sectors. As such, we are pleased that OANDA will join the Fields family and play a significant role in promoting advanced research and training at CQAM.”