They believed that the business model of existing FX ECNs could be improved by focusing on tailored liquidity – spot FX and metals only – and investing in relationships with clients and partners.
“To us, the relationships with our clients and LPs are at least as important as performance and price competition,” says Marco Westerman, Solid FX’s Head of Relationship and Liquidity Management. “We invest a lot in analysing and managing LP-client matches. It is not always easy to keep everybody satisfied, but we always aim for long term business success for all parties involved.”
“Another important aspect of our relationship management is good customer support. Our operations team is very knowledgeable about the technical side as well as the trading side of our business. Oftentimes, the quality of support suffers as a company grows larger: clients have to wait longer, get referred to different people and deal with a lot of red tape. That is not how we would want to be treated, so we take care to do it right for our customers.”
Solid FX is essentially an IT company. Westerman: “Technology is our day to day job. We build our ECN completely in house, so we are not dependent on third parties. That give us an edge over the competition and allows us to be flexible in our infrastructure choices. It also means that the quality of the Solid FX platform is in our own hands, so the IT guys really have to be on top of the curve.”
Solid FX continues to grow. Not only has the workforce doubled in size in the last two years, the company is set to launch a trading hub in TY3 (Tokyo) in addition to their existing hubs in London and New York.
“We invested a lot recently in new, faster and more robust hardware,” says Westerman. “And we are expanding, as we see demand for our services in Asia.”
When asked about the client base, Westerman replies: “Years ago, it was mostly broker/dealers and trading houses. But now the client base is much more institutional – asset managers and regional banks – and much more global. These clients have different requirements, for example, our liquidity managers are now very focused on keeping the rejection rates as low as possible.”
Westerman agrees that transparency is an issue in the market. “Transparency is paramount at Solid FX: there are no unexpected or hidden costs after the fact. On the technical side, clients can connect to our interface directly or use our trading GUI. It is not necessary to use a third party infrastructure provider, so our clients don’t have to pay additionally for infrastructure either. All of this keeps our pricing structure very clear.
“And finally, we send our clients monthly reports with their trading results. Though the counterparties remain anonymous, as is the nature of an ECN, the client is able to analyse their performance and go into specifics with our liquidity managers. The FX business is complicated enough, so we try to keep it as simple as possible for all involved.”