The increase in non-spot trading on FXSpotStream is a real growth story for you. Why is that and where is the interest focused?
Actually, all of our supported products continue to show robust growth. March was an all-time record for us with ADV hitting a record of USD62.4 billion and our overall volume reaching an all-time high of USD1.372 trillion. At the same time, since adding NDFs to our Service in 2017, we have seen tremendous growth in our Forwards and NDF volumes. Why is this a focus for us? Though the Forwards and NDFs volume is smaller compared with our spot volumes, it broadens our outreach in terms of who we can do business with.
Clients like the efficiencies we provide in connecting to one API and trading with up to 15 global FX banks. Similarly, the ability to trade all the FX and PM products they need down one channel helps them save time and money.
Disclosed channels work especially well during volatile times. In what ways has the Covid-19 market turbulence played into the strengths of your business model?
During times of volatility, clients want to know who they are doing business with. Our fully disclosed supported model means our clients know which bank is pricing them on a pre and post trade basis. And banks know the client and can tailor their prices accordingly. There’s transparency on both sides and that is reassuring when there is volatility in the market.
How did the number of clients going live on your service in Q1 2020 and ADV during the same period compare with Q1 last year?
Since our inception in 2011, we have shown consistent growth year on year in terms of volumes and clients. For Q1 2020 versus Q1 2019, we saw a 32.6% increase in terms of ADV, with February and March setting consecutive record months for the company. Client acquisition during that period grew 25%. Of course, at the same time it is extremely important that the Service continues to perform at the level expected and that our client support remains of the highest quality. In March, for example, despite extreme volatility and record volumes we operated without a single interruption to the Service.
The business case for banks to join FXSpotStream continues to strengthen but you take a very thoughtful and methodical approach to building the service. Why have you done that?
We look very closely at any new liquidity provider to make sure that what they offer meets the needs of our clients and the overall echo system we have created. This could be adding liquidity in certain currencies, adding liquidity at certain times of the day; etc. There are a lot of factors we consider when making these decisions.
What will you be concentrating on over the next few months to maintain the momentum of the business?
We are currently in the process of refining our Decay Analysis Report that will allow clients to enhance their relationships with their LPs by giving them a more accurate picture of their trading flow. We are also soon releasing a comprehensive MIS Report over our analytics software, FXInsights. Barclays and Societe Generale have just gone live on the Service. We also have several exciting enhancements we will bring online in late Q1/Q2. These are very exciting times at FXSpotStream as the business continues its growth 8 ½ plus years after its formation.