Robert (Bob) A. Santella is the Chief Executive Officer of IPC and has had an illustrious career in the financial markets spanning over three decades. Immediately prior to his current position, Bob was President of Fidelity National Information Services Inc. (FIS) Global Trading Group. As President of this group, he had responsibility for all trading, network, execution, energy and market data businesses. He has extensive experience across asset classes, ecosystem participants and front, middle, back-office trade lifecycle workflows and systems.
Bob, how strategically important is FX to IPC and what makes the industry attractive for you?
FX is an asset class of strategic importance to IPC, due to its sheer size and the corresponding scale of our clients’ FX activities. This is evidenced by the BIS 2019 Triennial Survey, which continues to show exponential market growth - April 2019 estimated trading in the FX markets was $6.6 trillion per day, up from $5.1 trillion three years earlier.
FX has long exhibited certain key and defining features in the context of the global financial markets. First and foremost, there is the intrinsic link between FX and the real economy – and the role that FX plays not only in facilitating global trade and commerce, but also payments. FX markets are primarily driven by macroeconomic events, and relative exchange rates are a direct reflection of a country’s economic health. Secondly, FX is typically the most immediately reactive asset class when it comes to economically significant events.
FX is also strategically important to us by virtue of the extent to which it is impacted by technologies such as artificial intelligence (AI) and machine learning (ML) – areas where IPC has made significant R&D investments. AI / ML techniques are informing better decision-making in the often volatile, fast-moving FX markets, by analyzing huge amounts of data and information in a matter of seconds. This is critical in our current crisis conditions – the ability to augment the judgment of human beings, and to better react to volatile market conditions.
What range of products and services do you currently offer to FX trading firms?
For a highly electronic, fast-moving and liquid asset class like FX, market access is absolutely critical. We seamlessly interconnect the global financial community, providing worldwide access to all markets, participants, applications and content sets across a unified cloud and enterprise-based delivery platform. Our mindset is to be the connector, and to help clients transact business smoothly and efficiently.
When we look at the trends that are driving the FX markets, we see that clients are increasingly looking for a single point of access to an entire ecosystem of vendors, service providers and other market participants: simply put they want a platform. In addition, in an ideal world, this platform needs to allow seamless integration and interoperability of multiple technology paradigms, not just access to the latest cloud and SaaS offerings. Voice still plays a role in trading of more bespoke, less-liquid FX structures, and needs to be equally supported. These are often complex demands to balance, particularly in a tough commercial environment.
We solve for these requirements. Our technology infrastructure powers a multi-modal platform and unparalleled community that together provide a comprehensive solution for end-to-end connectivity, facilitating secure information flow to financial customers globally. Our commercial and technical flexibility also provides customers with many options to connect and consume services, whether on premise or via private, public or hybrid cloud delivery.
Who do you mainly target (buy-side versus sell-side) and what factors are at play to alter their equation?
Market participants are highly interdependent, and our community is all about creating as diverse an ecosystem as possible in support of this. Trading firms need access to liquidity. Banks and brokers need access to market data for pricing and to a range of execution venues for best execution and risk management. By bringing all the players in the trading ecosystem together, and facilitating rapid and seamless connectivity among participants, we support the global FX marketplace.
IPC’s community network offers our participants connectivity to a readymade global financial ecosystem - one that includes a diverse range of firms for price discovery, liquidity sourcing and trade execution, such as broker-dealers, inter-dealer brokers, exchanges, hedge funds, asset managers, institutional investors, trade lifecycle service providers and market data vendors. In summary, we connect every market participant in the trade lifecycle.
Where do you expect to see global growth coming from over the next few years with respect to providing services to the FX market?
We still see traditional hubs such as the United Kingdom, the United States, Hong Kong, Singapore and Japan facilitating the vast majority of all FX trading, but many emerging markets are making substantial inroads, such as mainland China, which is now the 8th largest FX trading centre according to BIS 2019 Triennial Survey.
We have long viewed the Asia-Pacific region as a key area for growth and continue to prioritize growth of our service offering there. Prior to Covid-19, many of our Asian customers had already experienced impacts to their working practices and trading activities as a result of the events in Hong Kong in 2019/2020. We have been able to apply the experience we gained from supporting them to the US, Europe and other parts of the world.
In the context of current geopolitical events – not only the pandemic, but also Brexit and rising economic tension between the US and China - we may see more trading activity shifting to locations that are not currently regarded as global hubs. We continue to scan the horizon to support global and local trading communities as they evolve.
How was the firm impacted by Covid-19, and how resilient has it been?
The Covid-19 pandemic, and the accompanying lockdowns around the world, did not just affect our clients. It quickly became apparent that we would have to execute our own Business Continuity Plan and Work from Home strategies at a previously unimaginable scale and within tight timescales – all while supporting our clients - the world’s largest financial institutions.
We had to move faster than ever in order to help our clients ready themselves for lockdown. With new positions in traders’ homes composed of 25% physical hard turrets and 75% soft turrets, we have successfully supported 100% uptime across our customer base.
By the end of March, we had launched four new business continuity solutions into the market. In the weeks that followed, our company activities began to resemble a military operation. Gathering client feedback, managing supply chains, making enhancements and rolling out updates all had to be done with clarity, precision and efficiency.
Market participants have done a remarkable job in moving quickly and in ensuring the stability and resilience of their systems. The markets remained open and fulfilled their critical mission in providing liquidity and stability to every region of the world. IPC continued to support the new, urgent requirements of our clients while adapting our own internal business practices. We are proud to have successfully ensured that our customers were able to operate with no disruption during this uniquely difficult period.
How may Covid-19 change the way the FX market operates in the future (i.e. WFH) and how will this play into the strengths and product expertise of IPC?
Prior to the pandemic, it may have been understandable for one to overlook the critical role that our financial markets and their infrastructure play in underpinning world trade, commerce and supply chains. And taking a step further – the role that these then play in ensuring that workers get paid, that people can buy food, that they can continue to access healthcare and medicines. This is absolutely dependent on maintaining effectively functioning FX markets. We are already seeing new lockdowns being introduced, and it is abundantly clear that firms must remain prepared to operate with workforces working from home and alternative locations. We continue to support our clients during in this transition.
IPC recognizes that the necessity for operating efficiently and effectively – remotely – is critical too. We remain laser-focused on enabling our customers to maintain business continuity and continuing our critical role to ensure that the capital markets function smoothly.
Connectivity is also mission critical to business continuity and having access to a secure and resilient network that meets every compliance requirement is vital during stressed market conditions. IPC has a very large and diverse ecosystem and a network with a wide array of solutions for different needs. We experienced that the use of “voice” during stressed market conditions is one of the few reliable resources in a crisis, but depending on need, IPC can provide latency-sensitive connectivity extranets, wide area networks and other services.
What you think the trading room of the future will look like, especially in light of the firm’s experience with Covid-19, and how IPC is preparing for this?
Even before the pandemic hit, we were seeing that regulatory requirements, such as MiFID II, had led to an increasing electronification of the workflow between sales and traders on the trading floor. We see a real need for the integration of voice communications with trading technology and transforming voice conversations into insight. There is also a trend where traders are consuming multiple applications from a single terminal and sharing data organically among these applications.
Trading desks are also striving for faster execution, more efficient communications, and streamlined settlement and reporting processes, all of which are being transformed by AI-powered natural language processing. There are several areas where natural language processing will be leveraged in the trading floor of the future. Traders are looking to voice populate forms and applications on their desktops. Heads of Trading Desks as well as the middle office are looking to search through structured data to reconstruct trades instead of manually listening to audio files.
Millions of voice quotes are generated every day over IPC’s communications platform. We are unlocking this market data and empowering tomorrow’s trading floor by digitizing voice communications, enabling better analysis and automating workflows.
IPC continues to invest in the development of products that seamlessly wrap around and augment the sales-trader workflow and the client experience. This benefits trading floors as they can focus on where they can really add value – in building and maintaining relationships of trust with their clients.
How IPC has been looking to leverage next generation technologies like AI and Machine Learning for trading applications?
As previously mentioned, we see AI as one of the key technologies impacting FX markets at the moment. It is having a significant impact on trading activity, deployment of investment capital and the use of technology. AI / ML techniques are informing better decision-making in the often volatile, fast-moving FX markets, by analyzing huge amounts of data and information in a matter of seconds. This is critical in our current crisis conditions – the ability to augment the judgment of human beings, and to better react to volatile market conditions.
The impact is not only felt within the electronic and algorithmic trading space. There has also been a dramatic growth in AI-assisted voice trading, which can listen to calls, translate voice to data, interpret that data, and provide in-depth insight for traders. For traders working from home or off-site, the ability to rely on these tools not only as aids to decision-making, but also as a means of facilitating crucial regulatory data capture requirements over voice and chat channels, is invaluable.
Our FX Blotter app, which won “Best in AI” in the 2020 Markets Choice Awards, leverages natural language processing, machine learning and speech recognition technologies to enable financial market participants to convert their over-the-counter voice quotes into a structured data feed. It provides seamless interaction between voice, chat and electronic execution capabilities, with full data capture throughout.
The solution can be leveraged by traders working remotely to remain compliant with data capture requirements, and their employers’ compliance functions to maintain effective supervision and surveillance of their remote activity.
We also recently launched Dictation as a Service, a powerful, industry-first end-user solution for converting unstructured voice trade data into a searchable, exportable structured data format in real-time. The solution offers the following benefits:
- Drives efficiencies in voice trading workflows
- API integration to premier chat services
- Creates automated text records of voice trades
- Provides a trader’s consolidated daily tape
- Searches through structured voice data to reconstruct trades
- Supports internal and external regulatory compliance requirements
Why are cloud computing and “as a service” models building critical mass amongst FX trading community?
The ability to leverage cloud technology, and a cloud-based community of market participants, is a key differentiator for any firm. With cloud deployments of in-house systems, firms can rapidly scale up resources to support high volumes and throughput and can then release these resources when they are no longer needed. This effectively creates unlimited headroom for any trading system, at a variable cost - a concept unimaginable in the past. The true value of the cloud is the optionality that comes from building on an infinitely scalable and malleable infrastructure that is pay-as-you-go as opposed to large capital investments!
During Covid-19, cloud-based providers of services such as market data and exchange connectivity have been able to offer their clients rapid access and connectivity to new markets, with no new technology deployment required beyond configuration. This is essential, at a time when technology teams are working remotely and under constrained circumstances, and deployment windows are minimal and high-risk.
Ownership is a great model for assets that appreciate over time. In the case of technology, whether it be hardware or software, these are assets that depreciate over time. Subscribing to these as a service therefore eliminates subscribers’ exposures to the downside of depreciation and gives them all the upside of continuous improvement by the provider. The subscription economy – of which SaaS, PaaS, IaaS and cloud are all enablers – is transforming the way in which we consume services. The benefits that it brings to subscribers cannot be understated. Again, during the pandemic we have seen users of market data as a service being able to quickly connect to new feeds and access new markets and pools of liquidity, giving them an advantage over those with hardwired connections to exchanges and trading venues.
Participants in IPC’s Connexus Cloud gain access to over 7000 market participants and venues globally, across 60 different countries. They also benefit from fast, reliable connectivity to power all aspects of the trade lifecycle—order creation, order placement, trade execution, clearing, settlement, reporting and market data delivery.
What makes IPC different from other infrastructure vendors in a highly competitive market?
Our key differentiators include:
- Nearly 5 decades of experience exclusively focused on the global financial markets.
- The high level of trust that we have earned from our clients over this period as a result of our world-class follow-the-sun customer service.
- The size and diversity of our community of financial market participants. We have more than 7000 customers globally and over 120,000 users of our trading communications platform. Our award-winning solutions are also designed with security, scalability, reliability and compliance at their forefront.
We are extremely focused on delivering a customer-centric experience, and always remain closely informed of our clients’ changing businesses and requirements. We monitor market developments so that we can better understand and anticipate our clients’ requirements in the future. This approach – of embedding constant adaptation and learning into our culture – enables us to demonstrate greater resilience to unexpected developments and events, such as the Covid-19 pandemic.
Our customer-centric ethos, our focus on client service and our approach to anticipating our clients’ changing needs are embedded in our core values. We hire people who reflect those core values, as well as continually promoting them through our working practices and company culture. To us, this means always learning, listening to clients and constantly finding ways to build on our service excellence. Because we engage with our clients in an open way, they come to rely on us as a valued consultative partner. This creates a virtuous circle: as they open up to us more about their evolving business drivers and needs, we are better able to innovate and to anticipate the infrastructure needs of the market of the future.
How much investment do you make in R&D and in what ways does IPC look to engage with clients in key industries, like FX, to shape your product offerings?
The global FX market is constantly changing, and we believe that it is vital to remain on the bleeding edge of innovation. We invest heavily in R&D to support the markets and find new growth opportunities. We can quickly react and adapt to events like Covid-19, but our business model is not built on reacting to market events.
We actively invest to anticipate emerging industry shifts and to design technology that meets those needs in volatile markets. We base our strategic product roadmap, and our investment, on understanding our clients’ needs and future business requirements, as well as understanding where the market as a whole is headed.
We also carefully select specialist partners that complement our capabilities, so that we can deliver effective results. Our selection of GreenKey Technologies as a partner is a great example of this, and of our belief in the partnership model as a driver for technology innovation in FX and beyond. GreenKey’s industry-leading NLP engine enabled us to build both the Blotter app and Dictation as a Service. Both of these, although developed in response to regulatory requirements and drivers, have enabled transformational working practices to be implemented during the pandemic.
In addition, we partnered with Cloud9 Technologies to create an advanced, open cloud trading solution for the global financial markets. The pioneering, integrated cloud service unites three award-winning solutions - Cloud9’s C9 Trader voice communications and analytics platform, IPC’s Unigy trading communications platform and the Connexus Cloud financial ecosystem – to provide the global trading community with a unified solution for mobility, advanced data analytics and business continuity planning. Our comprehensive customer research and market analysis revealed that financial institutions were seeking a cloud solution that addresses their regulatory and compliance needs while streamlining their voice data capture capabilities in an increasingly fast-paced and digital environment. Through this collaboration, Cloud9 and IPC have not only addressed those important customer needs but have also accelerated both companies’ abilities to provide cloud-based, mobile, compliant voice communication services to financial institutions worldwide.
What we can expect to see over the coming months in terms of new products and services from IPC?
As you have seen, innovation, and providing a market-leading service to our clients that has innovation at its core, is of utmost important to us as a firm. We are actively looking at what we need to do in order to enable the virtual trading room of the future, such as bringing voice fully into the electronic environment.
This does not mean automating and eliminating all voice conversations; on the contrary, it is about greater integration with electronic workflows, trading technologies, data sources and data capture. Where we have voice products that are built on legacy infrastructure, we are seeking to rapidly upgrade the underlying technologies.
We are also constantly looking for ways in which our products can synergistically reinforce each other. Our Connexus Cloud customers can, for example, also benefit from our cloud-based BCP offerings. As our product suite expands, we are seeing even more opportunities in the marketplace.