The annual growth rate for January reached over 46 percent. What’s driving this?
FXSpotStream has a great model that works for both our clients and LPs. In a tough market where spreads are tight why would you pay to trade when you can receive the same quality liquidity for free. I run the global sales team and I hear the same feedback in every region - you have a clear transparent model, great client service with zero cost, so why would we trade elsewhere. This has been the continued reason why the client base is growing at such a rapid rate with our YOY volumes up 54% in 2018. We had a record ADV in January 2019 at USD 38.4Bn, and our second highest ADV in March at USD 37.76Bn.
Our people play a key part in our growth as we have a great global sales team as well as an excellent global onboarding and support team. The people we have at the company ensure we have a consistent culture and approach to our business.
Ok so your business model is clearly very attractive but how does it help both Liquidity Providers and clients to achieve great efficiencies?
FXSpotStream was built to bring greater efficiencies to the FX market. Our business is funded by our LPs who pay an agreed fee on a quarterly basis unrelated to volume. The more volume an LP trades over the service the less they pay per million traded. As we are solely funded by the LPs this means there is zero cost to our clients. Some of the other efficiencies found in our business are the way the company is structured. For example, in other models if you want 8 LPs you would need 8 separate physical connections, which would all be charged individually and paid for.
When you add up all the connections with all the LPs and their clients it turns into a significant amount. Using FXSpotStream we have a normalized API to our 13 global LPs. As a result our clients connect and write to FXSpotStream once and then can decide how many LPs they would like to see over that single connection. There is no need to add a new physical connection every time a client wants to trade with a new LP because with FSS we have already done the work it’s as simple as flicking a switch. These are just the efficiencies of the physical connection, there are also the benefits of our team coordinating most of the onboarding work, which means less time waiting in a queue at each LP and a faster go live. This all adds up to a better experience and faster time to market for our clients and LPs.
Why are we seeing increased migration of FX trading volume from anonymous to disclosed channels and in what ways does that shift in trading preferences play into your business value proposition?
FXSpotStream has always been disclosed and we are the largest disclosed streaming service by volume on the street. There have been market events happen and our clients like the certainty of knowing exactly who they traded with.
FXSpotStream facilitates the technology but the trading and the relationship remains between the client and LP as we are a relationship-based platform. When events occur our clients appreciate knowing they face 13 global LP’s with salespeople they know rather than having an unnamed counterparty with no long-term interest in growing their business.
Please tell us little about how diverse your global client base has become and how it is expanding?
When I joined our volume was focused in a single colo. We wanted to more evenly distribute the concentration, and throughout 2018 we increased the number of new clients by 45%. This resulted in more even spread volume across our 3 sites. We also greatly increased the number of clients trading, instead of the bulk of our volume being concentrated with the clients.
We now have a much more even client wheel with multiple clients contributing to volume. In terms of expansion we have always been progressive in looking at where the market is going. FXSpotStream started with FX Spot and now offers FX Swaps, FX Forwards, NDF/NDS, and Precious Metals Spot and Swaps. The addition of these products demonstrate to our clients they can use us for all their FX requirements. We have also rolled out an analytics tool, FXInsights, which allows our clients to see round trip times, best execution, Fill ratios etc. We continue to listen to our client base to develop and enhance this tool.
Why is the high touch level of support you offer clients so important to your overall service offering and in what ways does it help to differentiate FXSpotStream from many other trading venues?
Every client wants to know issues are being investigated, and at FXSpotStream this is central to our culture. When a client has a problem, we let them know it is being investigated. It’s key to continue to communicate and provide progress updates.
Not every issue is resolved immediately, but if you don’t communicate the client has no idea if you are aware the problem exists. We make a huge effort across the firm to closely monitor support queries. Everyone at FXSpotStream from senior to junior monitors our support box and you will often see our CEO responding. When a client works with you it becomes apparent that we don’t pay lip service to client support, but it is a core part of FXSpotStream.