Carlo Kolzer CEO of 360 Treasury Systems AG.
Carlo Kolzer CEO of 360 Treasury Systems AG.

Carlo Kolzer, CEO of 360 Treasury Systems AG.

Carlo, 360T was founded in 2000. Since then we’ve seen some remarkable changes in the FX market, both in terms of widespread trading technology development and deployment and the trials and tribulations of various online portals and trading venues. Have things gone according to plan in the way 360T has grown its business?

At 360T we have always followed the strategy of collecting interesting, friendly and profitable flows of buy side customers for banks by bringing cost and risk efficiencies to the trading process for both sides. Our attempts at the beginning of this process were difficult as we are independent, without strong banks or customers in our group of shareholders. The development of our business therefore took longer than anticipated, but the expected momentum has now been achieved, just a year or two later than planned. It’s worth noting that many of our competitors that were founded around 2000 and who have also experienced delays in the adoption of their e-Platform services, have been driven to insolvency, major strategy changes or significant down sizing.

How would you describe the way that 360T differentiates itself from other FX trading portals?

First of all we are highly focused on bringing value to both buy side customers and banks. Secondly, we have a very complete offering with regards to asset classes (FX including options, Money Market including MM Funds, Interest Rate Derivatives) and functionalities (Intra-Group Trading, Limit Orders, RFQ and Streams, etc) which allows us to serve respective target segments on a level that is higher than what they can expect from other offerings. Another important factor is probably the level of interaction and service with our customers in terms of general responsiveness, feedback internalization, felt competence of the individual employee and the reputation and trust that stem from all this. At the end of the day the recommendation of a satisfied customer is the best marketing that a company like 360T can possibly experience.

Can you bring us up to date on the number of liquidity providers you currently have on your Multibank Portal TEX® and any recent enhancements, such as support for new instruments you have made to the platform?

Since going live in October 2001, with just one bank and one customer, we have now increased the number of participating liquidity providers to 51. It is also interesting to see that we have quite a broad allocation of the business. The 14 most active banks only stand for 50% of the business that goes via the platform. Major enhancements are the SUPERSONIC TEX®, an executable streaming rates platform, the MM Funds trading capacity, as well as further functionalities like Multiple MM Roll-Overs, Advanced Order Management and next generation functionality for the intra-group trading. The combination of enhancements makes us attractive to new customer segments on the one hand and allows existing customers to trade even more over the platform.

You have been servicing the needs of the corporate treasury sector with your very successful I-TEX Intra-Group trading system, which enables a vertical integration of all transactions between a group treasury and its global subsidiaries. In what ways do you think treasuries are becoming more demanding and sophisticated in what they are looking for from an e-dealing solution?

Corporates that are using the 360T I-TEX service are centralising their cash flows on an automated basis. This puts them into a position where they can:

a) Benefit from economies of scale in the sourcing of Financial Products
b) Keep an overview and audit trail of all transaction that take place within the group
c) Generate netting effects

The steering of these internal flows and the automated routing to a manual dealer, mean that the 360T pricing engine and the bank market are getting more and more complex and the instruments that corporates want to use it for are becoming more complex as well. The increasing demand in the product and desire to fine tune the logic, drive our development strategy and lead to the changes that we are constantly implementing to reflect exactly the sophistication of demand that you are mentioning.

You develop and maintain your own trading technology completely in-house. What benefits and advantages does that unusual capability give both you and your clients?

The decision to develop our own system has meant a slightly longer time-to-market from the beginning which we saw as an investment in the future. Our competitors had in the meantime already gone live. However, it has turned out that this decision was absolutely the right one. Owning and managing the software gives us an undisputed and uncompromised flexibility, fast decision making processes and quick development cycles. We do not have to go through external price negotiation for a particular new development and there is no dependence that could be used against our interests. Furthermore, it has given us a broad “know-how” of business and technology throughout the organisation. The customers’ benefit is of course that they can expect fast enhancements and the capability of bespoke adjustments tailored to particular requirements. In fact, I think that this is an asset which is highly appreciated by everyone.

How much increased demand are you expecting to see for true cross-asset class trading solutions and where is that likely to come from?

From the beginning customers started to trade the standard FX and Money Market Deposit/Loan business over the platform. We soon realised that experienced users were keen to trade other products over the platform as well. More than a dozen customers regularly trade FX options and Interest Rate Swaps are also an increasingly frequent instrument over the platform. We hope that the MM Funds will be another great success. We will let you know once we have some experience with it. It tends to depend on the customer segment in which instruments they are active across the variety of products on 360T. Corporates and Market User/Taker Banks are very interested in using one platform for many asset classes. For Hedge Funds, which are predominantly FX focused, availability of other instruments is not such a great plus.

You have recently entered into a number of strategic partnerships and agreements with other organisations. What’s the rationale behind these initiatives?

Partnerships are intended to bring both parties involved substantial benefits and should lead to a win-win situation. This is what we try to achieve with partners that provide complementary offerings to the same types of customers. Due to strong market positions of both partners in different geographic regions even the customer base can on top be complementary. With Misys for confirmation matching and ICD for the MM Fund area we have achieved exactly this type of envisaged scenario and several of our early UK and US customers have resulted from these cooperations.

You have always been in parallel a specialist White Label trading technology supplier. In what major ways has the FX White Labelling business evolved since you entered the business?

That´s a very interesting question and the developments have been quite diverse. When we started the company all major banks were initiating their own proprietary single-bank trading systems, most of which were based on third-party underlying software provided by four major vendors.

Banks have subsequently gained experience in running these proprietary systems and in evaluating their success. It turns out that only for a group of banks with enough critical mass do such systems justify their costs. We therefore realised that with this pressure on prices only a decreasing number of banks would invest in such systems. 360T has always been focusing on affordable White Label solutions for user groups with less than 100 entities, which includes smaller banks, large centralized corporates, asset managers or brokers. In these segments the number of prospects is increasing.

360T is headquartered in Frankfurt. Where have you been focusing recent efforts to expand your global footprint?

Our Headquarters are in Frankfurt, because this is where we initially started the company. However, we are becoming represented in a fast growing number of countries. Currently you can find us in Amsterdam, London, Zurich, Paris and Sydney. In the very near future we will open offices in New York and Singapore. Our product is a global product and we now have to roll it out. Growth is an interesting challenge that requires to be managed properly and with due quality assurance.

Looking ahead, how important are new FX clients groups likely to become for 360T and are there any particular sectors you are keen to target?

If you run a business model like ours you are focused on your top line growth. This growth is highly dependent on your business potential and at 360T we constantly work on a huge potential which results from three dimensions: regions, customer segments and asset classes. Having the flexibility to grow in all of these directions gives us enormous potential for growth. To explore different regions we need to build local presence. To reach different target segments we have to meet their individual requirements of functionality and liquidity. Whilst our turnover was still 98% driven by corporates in 2004 this proportion has come down to 80% with the rest already coming from other client segments.