James, please tell us a little about your background in FX and the key product areas you have been focused on during the course of your career.
My career in the FX industry spans over 20 years involving sales, marketing and advisory roles, predominantly relating to FX eCommerce products. I have been heavily involved in the e-FX business from when it first began.
I spent almost a decade at Citigroup, where I was part of the team that launched and helped to grow major Global Electronic franchises. This included Citigroup’s first generation FX trading platforms as well as the successful multibank platform FX Alliance Inc (FXall), one of the most respected global multi-bank trading platforms in the market, which was subsequently purchased by Reuters.
I went on to become Managing Director at Bear Stearns, running its EMEA FX eCommerce business before changing my focus to manage and develop high growth FX-related SME businesses. I joined FXecosystem five years ago, attracted by the opportunities for major growth and the ability to carve a niche as the leading provider of outsourced connectivity services for the FX market. I felt that the wealth of experience I had gained in the e-FX industry placed me in an ideal position to drive the business forward.
I have always been fascinated by the evolution of technology and the benefits this brings to businesses. I also hold Board-level positions at other businesses, including Natterbox, a business telephony company, which provides highly secure, cloud-based mobile voice recording features amongst its services. This feature, which works on all mobile devices across the world, is particularly aimed at financial institutions needing to record traders’ mobile phone conversations in order to comply with FCA or Dodd-Frank legislation. It is already used by some of largest global FX banks and we envisage huge demand in 2015 from banks and brokers of all sizes.
When FXecosystem was launched what problems facing the FX market was it setting out to solve?
FXecosystem launched in 2010 to bring leading connectivity solutions to a wider audience at a more economic price level. CitiBank was our first client and I’m proud to say that we still work with them today. Our aim from the outset was to change how the FX market connects and lead the way in terms of outsourced connectivity services for the FX market.
As we have evolved and established ourselves as the market leader, we continue to focus on educating clients about the operational benefits of using outsourced connectivity services. We also invest heavily in our infrastructure in order to remain at the forefront of our industry.
What are your primary job functions and responsibilities within the company?
As CEO, one of my key roles is to drive innovation forward and plan our growth strategy but I also have overall responsibility for all aspects of the organisation, including financial management.
We have a flat management structure and I work very closely with Amar Vadhar who runs the network team and Lee Ann Jones, who is responsible for sales, to ensure that we all maintain open communication about our clients’ current and future needs and that we are able to provide a highly compelling offering and excellent levels of service. I also have regular calls with Marianne Largey who runs our US office.
We have a new head of administration joining us this quarter, which will free up my time spent on the day to day running of the company, enabling me to focus on the significant international expansion we have planned for 2015. As you can imagine, my days are hugely varied – from meeting clients and prospects to financial planning and team meetings.
What range of services does FXecosystem now provide?
I often describe FXecosystem as the plumbing of the FX industry. We offer low latency network connectivity, co-location/proximity hosting and fully-managed services. For all clients, we begin by offering an insight into the correct network set up and an understanding of the flows. We can also manage the procurement of hardware, rack and stacking and the set up. We monitor the lines and use forensics when required to understand where flows are going wrong.
FXecosystem has a presence in the LD4 and NY4 data centres and is also in the Moscow Exchange (MOEX) and in Turkey. By being based in the datacentres used by the majority of banks, our clients can benefit from ultra-low latency as the feed is direct from the respective bank. This is vital for financial institutions wanting to maximise the number of trades processed per second and eliminate milliseconds of latency which impacts on trading revenues.
What are the benefits to clients of your offering?
Our clients benefit from enhanced trade execution and operational efficiencies.
FXecosystem is unique in the fact that we focus primarily on the FX market. Working with us ensures that clients benefit from stable, low latency connectivity for their trading environment around the world.
Our management team has exceptional institutional experience and an in-depth understanding of the markets and, as a result, clients value our industry expertise. Because we are independent, we can provide completely unbiased and objective advice on which routes, carriers and solutions best suit our clients’ needs.
When banks and brokers become clients of FXecosystem, we don’t just think that they are working with us in London or New York, for example. It really doesn’t matter to us where in the world they are based. They come into ‘our world’ and become a member of our entire, evolving ecosystem.
Another advantage is that through our outsourced model we can also offer clients access to other parts of the world without the need for them to procure international links.
How does the Meet-Me-Room (MMR) concept work and how do your own MMR’s address and provide an alternative to the connectivity and cost issues of legacy infrastructures?
The FXecosystem Meet-Me-Room™ (MMR) provides a single point of entry to connect multiple market participants on a global scale. Our Meet-Me-Room solutions provide a central point of connection to multiple sources of liquidity, cutting down the number of connections that banks and brokers would have to put in place to achieve the same thing. The biggest benefits are in terms of cost savings and operational efficiencies.
Meet-Me-Rooms, however, are only one part of our offering. Our expertise in FX and network technology means that FXecosystem can provide a complete service for all connectivity requirements including hosted solutions.
What types of clients and trading firms does your team mainly work with and what do you do for a typical client?
We work with global FX banks, financial institutions, fund managers and brokers, offering a variety of flexible, bespoke options to suit their needs - whether they require end-to-end management of FX connectivity, a fully managed service or specific
components relating to certain elements of their connectivity needs.Some clients wish to outsource all their requirements to us. As such, we manage and support all of their networks, source the routes and carriers most suited for their needs and proactively monitor activity on their networks to ensure optimal trading infrastructure at all times. By working with us in this way, clients benefit from a simple ‘one stop shop’ for all their connectivity requirements. We offer flexibility and scalability to support clients at all stages of their growth. We have built long-standing relationships with our clients and work with many of the leading global FX banks such as Bank of America Merrill Lynch and Credit Agricole.
What you do sounds simple. Can anyone do it?
We make it sound simple but it is, in fact, incredibly complex. Being in the right data centre, having the right fibre and investing in the right equipment takes both time and money. It also requires an in-depth understanding of the market. We have invested heavily to get the company to this level.
A key part of our strategy has been to articulate, design, build and deliver these complex solutions in a simplistic way. If we made it sound as complicated as it is then most people would shy away from doing it. Understanding the “plumbing” is highly technical due to the moving elements involved - NAT lists, multicast, routing and traffic modelling to name but a few. If you Google these items you will quickly see how complex it is.
The connectivity issues facing FX market participants can be very complex. What are the benefits of outsourcing?
Often the banks and brokers do not have the in-house skills or resources to manage their connectivity 24x7 and that is their key driver to outsource this area. In fact, there are very clear cost and operational benefits in outsourcing to a specialist such as FXecosystem including reduced latency and enhanced trade execution.
From a communications aspect, the consolidation of many lines into one means you can reach counterparties efficiently via the use of the FXecosystem network without the need to lease your own communications. The various hardware platforms deployed provide a fast and reliable connection without capex management. This would ordinarily come at a hefty cost, as support for devices and general maintenance has a high price tag.
In addition, we can make the process less stressful and more efficient for our clients, offering them a single point of contact for painless on-boarding of liquidity venues and 24-hour access to the technical and commercial prowess of the FXecosystem team. Through our outsourced model, we can also offer clients access to other parts of the world without the need for them to procure international links.
Some firms choose to outsource just part of their connectivity and trading infrastructures. Is this a cost related decision or a worry about loss of control?
The decision as to how much to outsource usually depends on the customer’s internal structures, responsibilities and set up rather than budget. Typically we start by looking after a portion of an organisation’s FX connectivity requirements and when they see the advantages of working with FXecosystem, our remit tends to increase.
Rather than a loss of control, we provide more control and monitoring for our customers. We monitor the lines and use forensics when required to understand where flows are going wrong and to avoid bottlenecks which are likely to occur.
Are there any risks associated with having an over-reliance on just one outsourcing provider? If so how can these be mitigated?
I understand the concern about over reliance on one outsourcing provider as there could be a risk from a single point of failure, both from a commercial and technical aspect. However, this can be mitigated by selecting a trusted and reputable FX focused outsourcing specialist. We have a robust network in place with resilient and redundant connections along with the technical expertise that allows the effective mitigation of such risk.
We have built a network which can suffer multiple points of failure and still maintain the above SLA operations.
FX is becoming an increasingly fragmented and fast-paced marketplace. What connectivity challenges does this present for sell-side providers?
For sell-side providers, ensuring liquidity to an increasing amount of geographically disparate buy-side clients requires fast, reliable links. There are intrinsically high costs for adding individual lines to the buy-side and the scalability of these can be limited due to the outlay required. Further problems arise when time to market is increased due to the nature of carriers and provisioning times. Management of these links in an increasingly fragmented market and understanding the various capacities being used also adds to the complexity and creates significant challenges.
What is currently being done to identify bottlenecks in end-to-end FX connectivity chains?
Understanding where bottlenecks are introduced is vital when trying to negate them. The monitoring systems FXecosystem has in place allow for detailed analytics and granular representation of trade data and flows from a “packet level and not a payload level.” We do not examine the individual messages.
Capacity can also create bottlenecks. This is a moving target due to the nature of the trade data flow, and we are continually improving the ways to eliminate the bottlenecks. We identify potential areas these bottlenecks can occur and remove these obstructions by adding additional capacity, either bandwidth or infrastructure. We liken this to traffic flow on a motorway - we understand where the roundabouts and junctions are and ensure the necessary steps are taken to keep flow around these consistent.
FX trading firms need absolute reliability and systems that can maintain performance during peaks and unexpected spikes in market activity. What solutions does FXecosystem offer that provide detailed analytics and granular representation of trade data and flows to help avoid capacity bottlenecks from developing?
Reliability is absolutely crucial for our clients. We provide multi routes to market and have built a robust network which can suffer point failures and still maintain above
We can offer detailed reporting at layers above the standard network statistics metrics available from competitors because of the amount of capacity available on our infrastructure and the specific types of hardware we use. We are also able to provide granular representations on many aspects of trade data itself such as fill ratios, time to market statistics and if required, can further drill down to currency symbols and liquidity provider performance. All analysis can be completed in real time. Clients can have proactive updates and can also benefit from alerting mechanisms in which predetermined thresholds can be set.
Do you think, at least from a high performance trading viewpoint that FX is still engaged in a technology “arms race” with latency a major battleground, or has that particular war now been won?
FX trading will always be in a latency arms race as the market is so liquid and vast. There are regions all over the world where FXecosystem’s offering will increase trading volumes.
Due to some changes in legislation and regulation in certain territories, some FX venues have had to add a randomised delay per trade so connecting over the fastest circuits and using the most sophisticated of hardware would result in very little or no gain. However, these firms are few and far between so the need for faster and better connectivity solutions is still vital.
Relying on the internet for application connectivity in the cloud introduces a degree of variability and uncertainty around bandwidth, speed and latency. How much does this strengthen the argument for using specialist connectivity providers like FXecosystem?
The internet is commonly described as “the web.” There are many routes between any connection point and so this does mean information can traverse over any number of connections - adding the variability factor. We provide point to point connectivity therefore minimising the variance in latency between locations, helping our clients to sustain a reliable and constant connection to venues.
How is FXecosystem supporting the substantial growth of FX brokers?
The benefits to FX brokers are exactly the same as the benefits we offer to larger, global banks – i.e. cost savings, enhanced efficiency and the peace of mind from knowing that their connectivity is managed by an expert team 24x7.
To make working with us even easier for brokers, we forge partnerships with complementary technology providers, such as Gold-i who, like us, are also leaders in their field. This provides a complete technology solution to brokers, who have insufficient resources or expertise in-house.
What future plans do you have to further strengthen your position in the global FX marketplace?
2015 will be an exciting year for FXecosystem. We will be announcing additional dedicated connectivity solutions which will enable even more banks and brokers to benefit from having a single FX connectivity provider and extend the capabilities for existing clients. We have an exciting roadmap ahead, including a presence in TY3 in Tokyo.
This widening of our network underlines our focus to offer scalability to clients as they expand into key FX markets. By extending our ecosystem, we continue to change how the market connects, replacing the need for multiple leased lines to multiple counterparties.
We will also be announcing new senior members of the FXecosystem team and will be making significant investment in our technology, introducing a major game changer in this space.
One of the stated mission objectives of FXecosystem when the company launched was to try to instil a new connectivity mentality in the FX market. How successful do you think you have been in achieving that so far?
The first step was to get the market to understand that we are not a market aggregator, hence our work to educate about the importance of ultra-low latency network connectivity. The next step was getting prospects to understand the benefits of co-location and proximity hosting. Third was offering flexibility – we enable our many clients to outsource all or part of their connectivity and infrastructure needs and challenges, allowing them to focus more effectively on the key components of their business – trading, competitive strategy and sales.
I think people are beginning to be aware of our capabilities in the market. However, there is still further education to be done to communicate the benefits of co-location and proximity hosting.
What do you consider to be the 3 main secrets of your success?
First and foremost is our team, which is exceptional in terms of institutional experience and a genuine in-depth understanding of how best to serve the market in terms of products and services. Secondly, by being carrier neutral we can ensure the very best solution for all clients. Finally, our proactive monitoring is exceptional, ensuring optimal trading infrastructure at all times.