Hi Tom, and welcome to e-Forex. Please can you give readers an overview of your background and career to date?
Thanks for having me. I’ve been with FXSpotStream, as CTO for the past six years. I had a strong hand in the development of our FX algo project, as well as the building and implementation of our new low latency network. Prior to FSS I was head of FX Trading Venues for Thomson Reuters.
My professional journey gives me a great balance of experience within the industry, along with an intimate understanding of the company – its strengths and weaknesses – putting me in a great position to help us grow. This is a tremendous opportunity and I am grateful for the confidence shown by the board and the staff and look forward to repaying them.
There have been a lot of changes within the company so far this year, on both the technology and business fronts. While some of those changes we have done a good job of communicating, there are others that we will accept we have not. My first action as interim CEO was really to press the pause button on everything that was going on and speak to our clients and LPs. I wanted to get their thoughts on the situation and find out what was important to them before making any decisions.
I was then able to, with the help of our global team and board of directors, to put together a plan that took those needs into consideration. We approached the situation with honesty and understanding, and I think that what we came out with was a better, more inclusive solution that benefits everyone.
2022 was a record year for FXSpotStream. Does that put any added pressure on the company to perform in 2023?
2022 was a tremendous year for FXSpotStream. Our ADV was up over 30% year on year and we, yet again, grew at the fastest rate of any FX service, of those reporting their volumes. We saw growth in all products and continued to grow our client base, while helping our current clients maximize their efficiency. That is our goal for every year and 2023 is no different. We have a tremendous offering and I am extremely confident that we will continue to build on the success we have seen over recent years.
And how is 2023 looking as we near the end of Q2?
The momentum from 2022 has continued into 2023, in a much less volatile market. Year to date, we currently have an ADV of USD63.467billion, an increase of 1.85% when compared to the same period last year. Despite some noise in the media, it has always been business as usual for us here at FXSpotStream and our volumes reflect that.
The energy from within the company also reflects that, too. Last year was a great year for everyone here and I think the team is energized as a result of that. Our Sales team has been more active than ever, with trips to Switzerland, Amsterdam, South Korea, Singapore, Hong Kong and Dubai already in the books this year. We are always looking to get out and meet with our clients and LPs face to face.
Your background is technology. Does that change the focus of the company moving forward?
I wouldn’t say it changes the focus; our goal as a company has always been to provide the best service possible for our clients and LPs. Obviously, with any new CEO, there are things I will value differently, and some things may change, but the focus will always remain the same. While certain changes were set in motion towards the end of 2022, which means the company now operates in a slightly different manner, the day-to-day operation, the level of customer service and performance will only continue to improve.
From a technology standpoint, we are in the process of a large scale migration to a new low-latency network. This will be our big focus in 2023 as we feel it brings the most value to everyone connected to the service. We also have several other proposals that we are in the process of working through,
You mentioned changes within the organization, can you elaborate on that?
One big change for us in 2023 is obviously the business model. As the need to maintain, develop and upgrade our service increases, so does the need to generate revenue to reinvest. In the past, FXSpotStream has operated as a market utility, dividing our costs equally between liquidity providers and operating at net zero profit. The new model will allow us to generate revenue, which means that when new opportunities arise, we are able to invest more heavily, without the need for intervention from our board.
While this has led to an increase in costs for LPs, we have worked closely with them to communicate the value in this model, and develop a rate card that reflects the value of the service rather than simply covering costs. Moreover, we have introduced flexible payment options for our LPs, allowing them to choose between a subscription model, a brokerage model, or a hybrid that includes a smaller subscription fee, with a favorable rate card on top of that. For our LPs it is the first time they have been able to select their payment plan based on their business and highlights our willingness to listen to their needs and structure our business around them.
There are a number of possibilities this opens the door to, and we are very bullish about the move.
And could that include new LPs on the service?
We are very cognizant of the fact that our clients have relationships with many LPs. It is what our business model is designed around. And we know that those clients are going to work with those LPs regardless of whether they see them over FSS or not. We are currently in talks with a number of LPs about joining the service.
There was a growing demand from clients for more choice in the liquidity they were seeing. On the previous model however, it was difficult for new LPs to pay the subscription fee while building their business with us. Now, with a variety of pricing models, we can have the conversation with potential new LPs and address the client demand for variety in their liquidity pool.
We know that the best way for any of our clients to do their business is to access all their liquidity via one service and this is another step towards FXSpotStream being that solution.
How do you feel your offering compares to others out there, and what sets you apart?
FXSpotStream has always had a unique offering for clients and LPs, and I do not think that has changed. Clients do not pay a fee to access liquidity from 15 tier 1 liquidity providing banks. Our dedicated team handles the heavy lifting when it comes to setup and onboarding, making the process as efficient as possible for clients and LPs. In fact, adding a new LP is as easy as flicking a switch, giving clients real flexibility on who they do and do not see pricing from.
There is no denying that the company has grown a great deal in recent years. What is important however, is to recognize what drove that growth and continue to prioritize those areas. We have always described FXSpotStream as a ‘large company with a small business mindset.’ By that we mean that while the client count continues to grow, the level of attention we dedicate to each client on the service should not change. We feel that the level of service that FXSpotStream offers is unrivaled in the FX market, and our Client Services & Support Team, managed globally by Marc Sini, takes a great deal of pride in their ability to proactively work with clients to address an issue before it escalates.
The buzz word out of FXSpotStream recently has been Algos. How has that project performed?
The scale of the algos project was incredible. Taking the entire algo offering of 14 LPs and normalizing everything over one API was a tremendous amount of work and something we are very proud of. We have since added all algos to our GUI and made several enhancements after listening to feedback from our clients.
While the project brought a few surprises for us, in terms of who wanted to access algos and the way in which they did, we are delighted with the reception and continue to see demand from clients.
As with all product additions, we understand that the benefit is twofold. Of course, we have a strong client base and adding new products allows them to bring more of their business to the service. But it also addresses gaps in the offering that may have been sticking points with prospective clients. These additions can sometimes allow new clients to dip a toe, before deciding to move more of their business across after realizing the benefits of FSS. We have seen this with a number of clients where, after adding a particular product, it opened the door for them to migrate all their business over to FSS.
There is continued work on algos however, as banks fine tune their offering. We are constantly working with our LPs to ensure that we support the most up-to-date algos and features.
Has the focus shifted away from algos now?
We are always looking to help clients and LPs maximize their efficiency. If we feel that there is a particular client that would benefit from algos, or a particular bank’s algos, as with all products, we are always happy to make an introduction. Our dedicated Sales and Relationship Management teams take a hands-on approach with clients and LPs, maintaining open and regular communication.
I would not say we have shifted our focus away from algos, we are constantly working to add new LP algos as they are launched, and support the products needed – one example being the recent interest surrounding NDF algos – but we are now placing a strong emphasis on our new low-latency architecture project.
This has been a long-standing project that we were very excited to roll out. After migrating all LPs, along with a sample of smaller clients, we are extremely happy with the market data we have received. Clients are seeing market data latency times that are really outperforming where we expected them to be and, while we are still working on the max latency times we are looking to deliver, the initial reaction from clients has been very positive and they are excited about the results they have seen so far.
While we wrap up the market data side of the project, work is already underway on the orders aspect and we are hoping to begin that migration by the end of the year.
What demands does that place on you and the team?
The team has responded very well given everything that has been asked of them this year. There is a feeling of excitement here at the prospect of adding new LPs and the LPs being able to have a say in how they are charged. But the changes have shone a light on some areas in which we would like to strengthen our team and we are looking to make some additions to address this.
One role we are excited to add is Liquidity Manager. We feel there is a real need, especially if we are to open our doors to new liquidity providers, to have someone directly responsible for these relationships.
We are also looking to add a sales presence on the ground in Singapore. Singapore has been on the radar for us for a while now, but it’s very difficult to penetrate a new region without a dedicated presence. While we continue to expand the service in terms of products, new regions are also an effective way to target and acquire new clients. As a result, we are looking to add a full time salesperson in Singapore.
And finally, what does the future hold for FXSpotStream?
The core model and the philosophy of the company will not change. Since day one our aim has been to provide a more efficient and cost-effective way for clients to access liquidity. But with each addition we make, whether that be new LPs, new regions, new staff or new products, we open the possibilities for clients to use FXSpotStream and that is something we are tremendously excited about.
As we delve further into our low-latency architecture project, we believe we have a strong pipeline of clients. If we continue to execute at the same level of efficiency as the last eleven years, we feel we have a very good year ahead of us.