Neill Penney, Managing Director, Co-Head of Trading at Refinitiv

e-Forex talks to Neill Penney, Managing Director, Co-Head of Trading at Refinitiv

April 2020 in Cover Interviews

Refinitiv's trading business provides solutions across the entire trading workflow including pre-trade insight, execution capabilities, and transactional workflow solutions for the sales, trading, and research of FX, rates, credit, equities and other exchanged-traded instruments globally, constituting nearly all the major buy-side and sell-side financial firms around the world.

Neill, you have been in this industry for quite a long time. Please tell us a little about your background.

I co-lead the Trading division for Refinitiv as Managing Director. Refinitiv’s trading business provides solutions across the entire trading workflow, including: pre-trade insight, execution capabilities, and transactional workflow solutions for the sales, trading, and research of FX, rates, credit, equities and other exchanged-traded instruments globally constituting nearly all the major buy-side and sell-side financial firms globally.  I am vice-chair of the Global Foreign Exchange Committee (GFXC) which aims to promote the FX Global Code of Conduct.  As vice-chair, I represent the committee on the Bank of England FXC and the New York Federal Reserve Bank FXC.  

Since I joined Refinitiv, or Thomson Reuters as it was at that time in 2013, I have led the development of key FX industry offerings including FXall’s relationship trading products and Electronic Trading.

Prior to joining I was the Managing Director and European Head of Fixed Income E-Trading Strategy at Morgan Stanley where I lead the product strategy teams for foreign exchange and emerging markets, overseeing the design and development of Morgan Stanley’s eFX platform. In addition to that I have previously held several quant-related roles and as VP for J.P. Morgan across its FX and eCommerce divisions.

I call the University of Oxford my alma mater with a First-Class degree in Mathematics in 1991.

“We are an FX ecosystem provider and mean it when we say that “Data is just the beginning”

What do your day to day responsibilities usually involve?

I oversee the overall FX business for Refinitiv. This includes the world’s leading transactional venues such as FXall, Matching and leading eTrading platforms such as Conversational Dealing and Electronic Trading (ET). I work on a daily basis with all the leading clients and partners across the globe to understand where the industry is headed, what are the challenges that our segment is facing and how we at Refinitiv can best support the global FX ecosystem with optimal products, solutions and client services. As a market leader in the FX domain, we see the success of our clients and wider FX industry as the key metric of success for us at Refinitiv, and I see my day to day job as an opportunity to help facilitate the industry with the support of a number of great people here at Refinitiv and out in the industry.

Please also remind us about the range of services that Refinitiv’s trading business provides.

I often remark that more than what we say, the best description of our business is how our clients perceive and articulate our FX trading business. Very often I hear clients use terms such as the ‘FX ecosystem provider’ which in my view is a fair reflection of the breadth and depth of solution we offer. 

Consider the depth of pre-trade insights we offer from our Desktop solutions around price discovery, analytics on the macro and micro levels on global FX markets. Similarly, the benchmarks available from Eikon are a critical source of information needed to make any trading decisions.

In the current climate, access to trusted and the most up to date news is of paramount importance to any professional involved in FX trading. Access to Reuters News is therefore a key offering from our portals that set the experience for our clients apart.

Guaranteeing access to liquidity is a fundamental part of our business, and with leading relationship trading and eTrading platforms such as FXall, Refinitiv Electronic Trading, Refinitiv Dealing and our primary market platform, Refinitiv Matching, in place, we secure access to the deepest source of liquidity in the G10 and emerging market currencies for our clients.

Complimentary to our liquidity offering is our set of post-trade technologies such as Settlement Centre, Deal Tracker and Trade Notifications, as well as our recently launched compliance monitoring and surveillance tool, Refinitiv Compliance Archive. Together this suite of solutions ensures that our clients enjoy support across the entire breadth of the FX workflow from pre-trade, through trade execution, and finally, post-trade compliance and reporting.

Refinitiv serves more than 40,000 institutions in approximately 190 countries and is headquartered in New York

You have said in the past that with MiFID II and the FX Global Code now bedding down – innovation, rather than regulation – can finally be the driving force of the global FX market. Why is that?

The current market disruption once again supports my view that regulation is the key enabler that needs to propel markets forward. While digital innovations around latency, analytics, execution, comingling of human and artificial intelligence are indeed the areas that will help us achieve better outcomes for the FX industry – consider the COVID-19 shock to the market and what it meant for the global FX community.

The FX Global Code’s Principle 33 calls specifically on the industry to invest in robust business continuity planning to mitigate the operational risk to the FX trade. And while technology and innovations are the enablers of achieving that, the ‘driver’ is pretty much in the adoption of the regulatory framework that can help us achieve the best outcomes. Hence, I hold the view that if the speed of innovation is built on a strong platform of regulations – only then, will we see the FX global community move forward and tackle the upcoming challenges.

Corporate treasury engagement with the FX Global Code remains relatively slow. Why would you encourage more of them to sign up to it?

I had the pleasure of meeting and speaking at the Association of Corporate Treasurers Singapore towards the tail-end of last year, different times obviously in the pre-pandemic world, but it was evident that engagement from the Corporate Treasury segment with the FX Global Code is on the rise and will change significantly in the near future.

The flexibility, transparency, insights and reporting mechanisms that the code calls for are essentially the key areas that we see the corporate environment move towards. The drive around ESG is essentially a pathway that corporations and treasurers are going to move towards and the adoption of the FX Global Code is the best mechanism of achieving it.

Our teams quickly mobilized to launch the Novel Corona Virus App in Eikon

Data aggregation, data analytics and alternative data are starting to shape workflows for many FX markets participants. How is Refinitiv helping to create value for traders through data?

As a company motto, we really mean it when we say that ‘Data is just the beginning’. 

Consider Refinitiv’s Blended Spot Composite Feed which we made available to our clients recently. It provides the single most comprehensive source of indicative market rates created from the largest Spot FX liquidity pool on the market (with average daily volumes traded upwards of $120M). It sources rates from a blend including the best bid/offer rates from Refinitiv Spot Matching and Refinitiv FXall Pricestream, as well as a wide range of real-time bank and broker contributions. 

Similarly, we have greatly enhanced our Trade Performance Analytics (TPA) offerings to help the buy-side clients enhance their TCA and ensure best execution. It was greatly interesting to see the level of insights we were able to draw and share with our clients on volumes and spread during the market volatility phases of COVID-19 disruption. But beyond specific instances, our core remains in our commitment in providing actionable insights derived from data that is critical for our trading audience. 

Let’s talk a little about technology. How is Refinitiv’s technology helping to solve many of the challenges of fast evolving FX workflows?

I view technology as a great enabler in achieving any end results. Think about the immense cost pressures that the sell-side is facing currently with the move towards more passive trading strategies in the industry.

In this domain while on one end remaining on top of your cost per transaction is important, equally the end to end infrastructure that supports that full operation is also a critical component of how technology can be the enabler of change.

On our end for example, we are investing greatly in services that are nimble and help firms sustain and lower their total cost of ownership (TCO). Our robust post-trade services are going through this transformation to enhance Cloud access for example for managing the compliance and archive workflows. Refinitiv’s Deal Tracker as a Service is a key example of how we can utilize the technological innovations to deliver the efficiency in middle and back office operations that are much exposed to heavy tech infrastructure and costs.

Similarly, how we are able to facilitate eHedging (where we’re seeing record volumes) or how we are enabling some of the world’s largest corporates to streamline their money market auctions via a single integrated interface is how we identify, test, build and roll out tech innovations for our client base.

Regulations as a driving force of the next era in FX trading world will be much more prominent in a post COVID-19 world than before

Do you think that AI and Machine Learning will eventually become a significant enabler of competitive advantage in FX and how much disruptive potential do they really have in our industry?

The trading industry has been engaged in regulatory reform of one form or another for a decade now, which meant the industry had little capacity to incorporate innovative technologies being used in other industries.  Now these biggest waves of regulation are behind us, the industry has an opportunity to catch up.  And it will benefit from being a fast follower in technologies such as cloud and machine learning.  The recent market turmoil is a prime example of how events outside of technological, regulatory and geopolitical domains also can have a significant impact on the way the future world of traders will develop. So our reliance on AI and Machine Learning can be a competitive advantage, only when it is driven with a framework of keeping the ‘people’ perspective well and truly embedded with the technological advancements. My colleague, Michael Chin, recently co-authored a fantastic report on the ‘Future of Trading’ exploring in depth some of the data, technology and people challenges that are re-shaping the Trading industry. 

COVID-19 disruption and record levels of market volatility are proving a serious test of FX trading platforms, liquidity, risk management systems and continuity plans. How has Refinitiv been performing during the current period of stress?

The response from the overall FX trading community has certainly been phenomenal in keeping this key industry and enabler of wider financial markets infrastructure highly resilient and operational during this tough time.  

Refinitiv reached out to more than 450 of our leading clients to understand their readiness for such a disruption and it was highly encouraging to see that the majority of those surveyed had made the switch from trading floors and office workstations, to BCP locations or home offices. We published these findings recently in a blog entitled: COVID-19: A test of FX trading continuity. One of the differentiators of Refinitiv’s FX trading platforms and solutions is that it is completely electronic. This provides greater flexibility than traditional voice-trading, especially in an environment where most traders are working remotely.  Our platforms give the market flexibility to adapt to the long-term realities of the current situation.   

Similarly, on our end, we have invested over a number of years in resilient business continuity plans and transitioned smoothly into a virtual office environment in light of the guidance from local health and government officials.

We recently made available to clients the Blended Composite Rate Feed (TRB) that provides a market reference rate

Refinitiv offers access to the Coronavirus App on your Eikon platform. What content and insights does this provide?

Very early on we realized that more than ever, during this period of uncertainty and ‘fake news’, access to critical news, market insights, commentary and forecasts are what our clients will need. Our teams quickly mobilized to launch the Novel Coronavirus App in Eikon that consolidates our news, insights, data and content from the markets and impact on key segments such as commodities and healthcare. It is one of the most popular apps on Eikon at the moment and we have had great feedback on how amongst the ‘information noise’ it really provides the key pieces of information needed to make smarter decisions. 

Once we eventually start to get on top of this crisis and things begin to settle down – what impact, if any, do you think it will have in the near to short term on the FX market?

How will the pandemic and related crisis play out in the coming months? I believe that is one question that everyone from governments, to citizens in their homes around the globe, are looking for an answer to, so I won’t claim to know the answer to that question either. 

However, a few trends have started to emerge in recent weeks which give us at least some indication of where things are headed. There is no doubt the digitalization and electronification of markets, already a major trend, is going to gather pace. I was speaking to colleagues in Asia and this is what we are hearing from the markets as well. Banks and other organizations can use this disruption to sense check how ready they are for any major disruptions and advance the work on full digital enablement across organizations that can provide long-term gains, which in my view, in and of itself, will bring a greater degree of transparency and efficiency to our FX markets. If you combine that stance with greater adoption of the FX Global Code, you get a sense that ‘regulation’, as I mentioned before, will be a greater driving force in the next era of FX trading, and will be a much more prominent component in a post COVID-19 world than it was before.

Insights from the Refinitiv 2019 Artificial Intelligence / Machine Learning Global Study

Where do you expect the next round of growth for Refinitiv’s FX trading business will come from?

Our growth truly lies in the success of our clients. Whether we take it in the increase of volumes on our transaction venues or the efficiencies in overall operations that our clients can realize with our solutions.  The strong results and growth we are witnessing in the emerging markets is one key area that in my view will be the enabler of growth for our business in the coming years. The strong partnerships we are able to establish with central banks, corporations and other firms, on top of our significant collaborations with asset managers and regular banks, gives us a great platform on which to really grow and develop our business as a global market leader.