DMALINK - A very smart operator looking to disrupt the FX status quo

e-Forex spoke to Michael Siwek, Founding Partner of DMALINK to gain an insight into how an idea drawn up 7 years ago on the back of a paper napkin is shaping out to overhaul the FX ECN model for the buy-side and challenge the status quo of double charging, reporting inefficiencies, and costly use of credit. Since its launch, DMALINK has undergone significant transformations from operating an FX agency to a data-centric platform with a unique ECN-model, delivering benchmarked trading services that enable market makers to price buy-side clients at $0, blended with upcoming AI-powered liquidity management and anomaly detection across spot, forwards, futures, and NDFs

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Michael Siwek


Why do buy-side clients and banks connect to DMALINK?

Funds, CTAs, and corporates, amongst other buy-side participants that trade foreign exchange, particularly within an emerging market context, enjoy our data-centric approach. We quantify the true cost of execution and empower buy-side clients to understand, in real terms, how much their trading strategy costs. We do this through benchmarked liquidity access and proprietary logic that identifies the most relevant mid-market rates at specific points within a deal execution lifecycle. Our service is delivered through one single API without any third-party TCA or reporting fees, and we are working on the delivery of a web portal to provide further value and improve the experience for our platform participants.

Compliance Officers, especially those within banks, take advantage of the service to help with internal and external reporting requirements from a best execution perspective. One of our early business differentiators has been to provide no-cost access to market makers. The approach delivers benefits to the sell- and buy-side alike, and it has been very well received by the industry.  

Please tell us more about your ECN model. 

We are an institutional venue for buyers and sellers of emerging markets cash foreign exchange and precious metals.  Natwest Markets centrally clears and settles deals on DMALINK platforms. Except for self clearing entities, all participants transact via a Prime Brokerage or Prime of Prime relationship. 

Post-trade, we provide trade execution reports, which can be sent to the back-office or directly to the client’s credit provider. 
We deliver electronic streaming prices (ESP) across 60+ currency pairs, with a particular focus on emerging markets, including XAU. Benchmarked liquidity, market data, GUI-white label, and regulatory reporting services further enhance the trading platform. 

Participants cross-connect to our low latency infrastructure co-located in Equinix NY4 (New York) and Equinix LD6 (London) via FIX and binary API. We also offer over-the-internet connections and a GUI for manual trading. The service is available to buy-side clients, including funds, CTAs, SMEs, Proprietary Trading Houses, and banks. 

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Ashwind Soonarane co-founded the business with me in 2014

Liquidity management is a fairly manual process. Do you foresee any overdue changes?

Great question.

Liquidity management (LM) is somewhat of a balancing act between relationship management and data science. Some ECN processes have been automated by technology. LM is not one of them. Aggregators of all sizes tend to involve a range of people to create a custom stream for their clients. This manual and non-static process requires significant oversight and labour. 

At the end of the day, no human can analyse several gigabytes of data on a daily basis. We feel that Artificial Intelligence with deep learning models can help relationship managers provide a superior and more efficient output that allows clients and market makers to create and maintain a harmonious trading relationship. 

We are heavily investing in the creation of intellectual property within this space. We have teamed up with Axyon AI to develop and deploy custom AI across a range of workflows and systems. We believe that this will greatly improve trading performance and strengthen relationships in the coming months. It will also likely make DMALINK one of the earliest implementers of deep learning AI within the industry.

Beyond liquidity management, do you plan on deploying AI elsewhere?

As the AI models are deployed, we want to help the industry avoid credit over-allocation, especially from Prime Brokers and other credit providers such as Prime of Prime firms. We all know that the most expensive part of the trade lifecycle is credit. As such, we are deploying solutions that will enable PBs and CCPs to only make available what is necessary to support their client’s business, rather than over-allocating across data centres and relationships. 

Our dynamic AI-based credit engine can save up to 65% of credit-related fees, which in turn can help the market to reduce counterparty settlement risk, amongst other credit considerations. 

We have begun discussions with two Tier 1 financial institutions in New York to deploy our new credit engine to manage NOP exposure using our adaptable calculation methods not purely on consumption, but factor in other events which may impact counterparty credit worthiness, such as the SNB event in January 2015.

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Manu Choudhary, our CEO also looks after strategic enterprise deals and partnerships.
He will deliver the keynote speech at the upcoming Trade Tech USA FX event which will be held in Miami in early 2022

Last year DMALINK co-launched DeFinity. Please tell us about that. 

Yes, that was very exciting, especially since we did it through a decentralised and permissionless offering, which for the institutional space, is a very novel idea. 

We have recently secured an investment round to support the design and development of the tech stack for the service. The objective is to remove the cost and risk of credit by creating an ecosystem where all foreign exchange participants can clear and settle their deals intraday. 

Despite the name, DeFinity Digital Assets does not support cryptocurrency. Instead, it evolves within the institutional financial and capital markets, namely foreign exchange, bonds, commodities and, in the near future, equities. 

Based on current market feedback from some Tier 1 institutions, we feel that there is a real appetite for a near-instant settlement service that can be used by buy-side and sell-side clients, one that will also help clearing houses and central banks provide a better service. 

Your business is bank- and exchange-independent. What is it like to be one of the last independent ECNs?

Although we are bank- and exchange-independent, we are fortunate to be partly owned by the UK government. This means that we benefit from existing industry knowledge and UK-based incoming investors who believe in the opportunity of regulatory and technological change in the foreign exchange market, for which DMALINK is prepared.

This position affords us the freedom to realise ideas and adapt quickly to change. Our team is experienced in the FX market and although we are small compared to some of the businesses who started 20 years+ ago, clients realise the advantages of an intimate team and a personalised boutique-style service. 

Having a smaller team allows us to be very focused in our approach towards our clients, new and old. Everyone knows their role, and everyone plays the part to the very best of their abilities.  Having more than just ‘catch-up’ relationships with our participants allows us to work closely with each individual team, ensuring their eFX franchise needs are met.  We all know some FIs are flow-focused, some yield-focused, and some seek to improve their overall execution experience and require in-depth reporting. Being cognisant of individual goals enables us to connect suitable buyers with sellers.  

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Ashwind Soonarane assumed our CTO role last year

Speaking of the team, please tell us about who is behind the business. 

When I founded the business in 2014 with Ashwind Soonarane, we did not know the great team we would have today. Fast forward 7 years, and we have the pleasure of working with some very talented individuals. 

Manu Choudhary, our CEO, joined us in 2019 from Lloyds Bank, where he spent 12 years in acquisition finance, derivatives, and FX sales, working with global SMEs. Prior to this, he spent 3 years at Barclays Investment Banking. Today, at DMALINK, Manu looks after strategic enterprise deals and partnerships, alongside fulfilling CEO duties. 

More recently, we were fortunate to attract Michael Idzkowski to the Sales Director role in London. Michael joined us from ADS Securities, where he was the Head of Relationships across all of their existing business units.

Clients count on our Mauritius-based Operations team to provide round-the-clock coverage. The team currently consists of six team members.

Our data science team in the UK is currently made up of two people. Our data scientists focus on the research and development of systematic models to detect patterns and improve performance across all our platforms.  Although overarching across several departments, Ashwind Soonarane assumed the CTO role last year. He ensures that we stay ahead of technological innovation, acquire intellectual property, and deploy strategic plans. 

My primary objective is to grow our client base globally and I therefore look after our vendor and partner relationships. 

Finally, our advisory board and investors are well-equipped to provide DMALINK with guidance, FX-based opportunities, and they also oversee the overall governance of the business, which will be especially important as we gain momentum as a group.  

Are you planning to grow the team further in 2021?

To help with the onboarding of clients and SG1 expansion plans, we are increasing the head count over the coming weeks and months across sales, operations, and data science. As such, Michael Idzkowski will work with his US and APAC counterparts to look after existing and incoming buy-side and sell-side relationships. 


On our operations team in Mauritius, we will see three new team members, alongside a seasoned Head of Operations, ensuring optimal performance and service delivery across departments.  

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Clients count on our Mauritius-based Operations team to provide round-the-clock coverage.

You currently support cash FX and precious metal products. Can you share details about your upcoming NDF service?

The NDF market has been steadily growing over several years as investors look for more ways to hedge their market exposure, meanwhile those hunting for alpha are utilising NDFs as a means of generating PnL for their desks. Moreover, Asian NDFs, such as CNY, INR, KRW, TWD, and other off-SEF non-deliverable forwards, have grown significantly between 2013 and 2021.  

To support demand, we have decided to launch in the SG1 datacentre in Singapore over the coming months, working closely with the Monetary Authority of Singapore and Equinix. A select few FIs have agreed to help us beta-test the new streaming broken-date NDF platform, using our benchmarked mid-rate functionality. 
This will also allow us to expand within established relationships and broaden client penetration, including with those who previously could not assign resources to a spot FX and precious metals-only business. 

You recently reported that Nomura and other Asian FIs are joining the DMALINK platform to bolster the upcoming NDF and cash eFX book. What’s the story behind this?

That is correct. Nomura and several other APAC-focused financial institutions have signed up to the service to provide customised Asian eFX pricing to our buy-side platform participants in New York and London, with Singapore being added in due course. 

The addition of Nomura to the DMALINK ecosystem enables select users to sustainably access suitable pricing pools during Asian hours. As we continue to develop our company and technology and apply deep analytics to improve execution, we envisage that the APAC footprint will outgrow New York in the coming two years, in line with client demand. 

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The DMALINK platform GUI

How, if at all, has the pandemic impacted your business?

From an FX market perspective, the past year and a half has been reflective of global economic and geo-political events, which tend to drive volatility and, in turn, create trading opportunities for our clients.  This has had a knock-on effect on incoming investment as savvy investors seek to diversify their portfolio away from retail and brick-and-mortar businesses seeking pandemic safe-havens for their cash. We plan to use this opportunity to  build out our tech stack and product offering aggressively over the next five years so that we will become the venue of choice for buy-side clients seeking execution, reporting, market data, and settlement services. 

Institutional clients trade fairly large clips. Do you offer SME solutions facilitating smaller trade sizes?

Traditionally, we have supported trade sizes in excess of $100,000. More recently, we have decided to aggregate trades using the Traiana NetLink service. The addition of NetLink enables DMALINK clients to increase operational efficiency by aggregating trades, which provides for credit efficiencies through netting. The additional cost saving will allow DMALINK users to enjoy a broader spectrum of trade sizes and enable new counterparty types to join the DMALINK ecosystem, such as SMEs and other second- and third-tier participants.  NetLink enables us to add diverse flow to our FX ecosystem, which benefits the buy- and sell-side. All trades will continue to be cleared and settled through Natwest Markets.

What’s in store for 2022 and beyond?

We understand that the FX market is changing rapidly, both from a regulatory and technology perspective, but also because of the advent of digital currencies, especially those backed by central banks. We plan to roll out regulated FCA- and MAS-backed products to help clients achieve better trading results, whilst staying ahead of the regulatory landscape using DMALINK and DeFinity tools, which are available to all clients across the group of companies. 

2022 and beyond looks very exciting and challenging at the same time! DMALINK will keep investing in innovative technology and tools to provide better execution for our clients, whilst also broadening the scope of tradeable instruments. Through strategic collaborations, we are already working on a range of solutions that, largely based on client feedback, will fill market gaps. We are additionally leveraging solutions under development by partners, subsidiaries, and affiliates to propose a unique offering to our clientele.

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Michael Idzkowski is our EMEA, Sales Director based in London

Looking ahead, how do you think the FX markets will change?

I believe that CBDCs will become a reality to a certain degree over the next 5 years in Europe and the US. But e-GBP, e-EUR, and e-USD, to name but a few, will not replace cash right away, although we may see a push from the government and central banks in that direction. As such, I believe that we will see strong growth across the industry, which can be fuelled by the addition of central bank digital currencies across certain parts of the world. 

The key will be preparedness, and we aim to provide a cutting-edge service to a wide range of participants through DeFinity, in co-operation with DMALINK. Also, it is likely that we will see enhanced regulation squeezing compliance officers globally to incorporate the relevant framework to meet their fiduciary responsibilities. Beyond deal execution, clients will demand more from their execution venues. 

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We plan to become the venue of choice for buy-side clients seeking execution, reporting, market data, and settlement services