You told us last year about the strides oneZero has made in serving the institutional market. How have market trends such as higher FX volatility in early 2023 and a greater focus on industry regulation affected the next stage of this push?
Andrew: The rise in FX volatility – especially in the first quarter – was both a major benefit for the industry in terms of boosting trade volumes, and a significant challenge to technology providers. Some technology suppliers struggled to cope with this test, but oneZero’s systems remained robust and adaptive, allowing us to keep serving our clients when it mattered most.
This was supported by our ‘technology first’ approach, and our experience serving the FX brokerage space over the last 14 years. It was also complemented by our recent investments and evolution in servicing institutional counterparties and their requirements.
We know that nothing else matters if your technology solution is not both robust and scalable. This has proved to be a valuable calling card as we increase our interaction with institutional clients such as regional banks, asset managers and prime of primes, along with liquidity providers, including major banks.
The focus on coping with increased regulation is another area where the higher end of the retail brokerage market and institutional firms both face similar challenges. oneZero has made product enhancements to help clients of all types to cope with regulatory requirements while facing minimal disruption to their core business activity.
Advances in data management are key to FX technology innovation. How is oneZero making further improvements to your Data Source function?
Andrew: Data has always been at the forefront of what we do at oneZero, and this year we pushed even harder to invest in our ability to help clients make the best possible use of FX data – both their own information and the vast amounts of data that can be accessed via oneZero’s solutions.
At the start of 2023 we hired Steve Totten as our new director of quantitative analysis to spearhead this upgrade in our data deployment.
Steve was most recently the global head of e-FX at Unicredit and before that a portfolio manager at Citadel, so he has first hand knowledge of what oneZero’s institutional clients need to succeed in the fast-evolving FX markets.
Welcome, Steve. What attracted you to oneZero, and what do you view as the main opportunities to develop FX data tools?
Steve: I wanted to join a firm that is pushing the boundaries in FX technology and found that Andrew and the entire team at oneZero shared my view that the knowledge derived from analytics is fundamental to achieving the objectives of trading market clients.
oneZero already had a fantastic Data Source product when I joined, and data capture and measurement is really part of the DNA here, so I am excited to help to take this to the next level.
Our goal is simply to help clients better manage their franchise. We have an extremely robust data pipeline that captures millions of trades, and terabytes of pricing data in all market conditions, and recently increased our investment to further speed up our data query performance across massive data sets.
Our Data Source Insights offering produces analytics off the back of this, with a focus on helping eFX traders, salespeople and quants to take away actionable results.
We’re also adding new analytics on internalization efficiency, and how effective and profitable a client’s skewing model is.
On the regional bank side we’re working on more tools to help sales and trading boost their RFQ performance on multi-dealer platforms, across both spot and swaps.
And multiple reports cover liquidity pools, spreads, pricing and the value of flow over time, including how different elements correlate.
Andrew, you and Steve both mentioned regional banks, which have faced a difficult market backdrop this year. What do they need from a provider of FX technology solutions?
Andrew: Some regional banks have certainly had a challenging year in certain markets, primarily linked to managing deposit outflows that were themselves due to the effect of higher interest rates. Though the impact was relatively isolated among a few big names, the broader challenge has caused many regional banks – both in the US and other countries – to re-examine their business models.
Other regional banks are having a good year, with strong profitability driven by higher rates, and, coming off the back of a couple of years of strong growth in markets, and in particular FX revenue, they want to continue investing in their technology stacks and capture increased market share.
Both of these factors have prompted some fascinating conversations between oneZero and regional banks, as we discuss the opportunities to retool FX technology to ensure that FX becomes both more efficient and ultimately an even greater revenue contributor.
New technology can level the playing field in FX and demand among regional banks in the first half of 2023 has stemmed from new profit sources emerging and a keen focus on stability and data analytics. This is developing into a new period of creative disruption by prompting an examination of long standing industry habits. And that in turn is very similar to what we observed in the brokerage space in the 2010s.
AI has been one buzzword of 2023 for trading markets. How is oneZero developing AI functionality to help clients by delivering intelligent performance that is enhanced by new ways to use data?
Steve: The advances of AI are opening a new era of possibilities in the FX industry. AI algorithms can analyze vast amounts of data, uncover hidden patterns, and identify valuable relationships in sophisticated ways. AI techniques are evolving fast, with development of clustering models one of the areas where we are seeing the biggest early benefits for our clients. At oneZero, AI is already deployed to analyze client flow and markout information.
This delivers efficiencies for traders, as our model flags up clients whose trading style has changed recently, allowing them to focus their efforts on the most relevant customers.
In order to effectively train this model with sufficient statistical power, a large set of trades is required, and a lack of data can end up locking out smaller firms from this next generation of analytics. At oneZero, firms of all sizes can benefit from our vast dataset by aggregating their orders in a confidential and anonymised way with information from other market participants for mutual benefit.
Firms understandably don’t want to give data on their entire trading history to a liquidity provider to run analysis, but as a neutral third party we supply metrics that can be quickly deployed to improve performance – and client/provider relationships.
oneZero also has a unique maker pool analytics tool that allows clients to test the efficiency of maker pools used for hedging via simulations that allow replays of taker orders against alternative pool constructions.
Watch this space! There is much more to come in terms of deploying AI for our clients.
Andrew, oneZero recently won the FX Markets e-FX award for Best Liquidity Aggregation Service – for the second year in a row. What is oneZero doing to maintain its leadership in liquidity service provision for clients?
Andrew: Fundamentally, we are investing and innovating. We have doubled our investment in technology in the last three years, which stood us in good stead when volumes surged earlier this year. I should also point out that FX data volumes are rising at a far higher pace than actual trade numbers, including when markets are busy. That is placing additional pressure on technology suppliers and raising the importance of partnering with a robust, scalable FX solution provider.
Some of this is a commitment to basic service standards – unlike some firms, at oneZero we support our solutions with 24/7 trade operations and our performance service level agreements are backed by data, for example.
We also acknowledge the challenges faced by market participants today. Reducing FX latency without compromising the breadth of information available for decision-making is difficult. oneZero’s commitment to investment allows us to deliver performance improvements that keep up with increasing market speeds. This is not the case for all participants in the market today.
I was pleased that this effort was recognized by a number of awards this year, including Best Trading Solution for FX Markets in the TradingTech Insight Awards in both the USA and Europe, and Best Technology Provider, along with Best Hosting and Connectivity Provider with clients polled for the Global Forex Awards B2B.
Hedging efficiency is a key element of delivering for FX clients. What is oneZero doing to improve functionality for hedges that are conducted along with spot customer trades?
Andrew: We have definitely placed an increased emphasis on providing more choices for hedging functionality. This includes passive hedging tools such as peg orders that can be used to reduce risk over time as a lower cost alternative to crossing spreads with active risk management trades.
oneZero’s Institutional Hub enables our clients to either use the same maker pools for hedging as for customer pricing, or to tap an alternative maker pool. We allow customers to utilize their real-time inventory of positions to provide better pricing to their clients, through mechanisms like price skew or dynamic spreading.
Decoupling pricing and hedging pools allows incorporation of skew safe feeds into execution logic in a controlled mechanism that prevents maker skews from leaking to the market via customer pricing functions.
Can oneZero’s clients combine your functionality with their own proprietary algorithms?
Steve: They can – and in fact we encourage clients to do just that. oneZero’s Algorithmic Pricing Module is an advanced price creation tool that allows clients to insert proprietary algorithms and native code within our Institutional Hub.
This enables customized pricing as proprietary algorithms access market data, risk positions and other information. The module delivers greater control of underlying data elements in the construction of price algorithms, which run in real time on the same hardware as the oneZero Hub.
This could be as simple as integrating a market event feed for dynamic widening around numbers, or something as sophisticated as a full in-house pricing pipeline, driving spreads, skews, and volume banding.
There is no need to expose proprietary processes to oneZero – or anyone else – in order to maintain your competitive edge. And clients can also import custom parameters into our hub, to allow users to make real time changes without changing the algorithm’s source code.
Andrew: I would add that open API frameworks have been a key feature of our solutions at oneZero for over a decade now, and we are constantly learning and improving our service from close collaboration with our clients.
Collaboration has indeed been another buzzword in FX markets in 2023. How has oneZero’s EcoSystem helped market participants to work more closely together?
Andrew: There is a growing appetite for oneZero’s EcoSystem as clients come to appreciate the benefits of using our secure, ultra low latency network to connect with a wide range of key partners. At the risk of a pun on our name, FX trading really does not have to be a zero sum game.
The overarching policy for our solutions for clients remains as it has always been: we are liquidity neutral and want our clients to have access to the LP relationships, credit and market data that fuel their business today and in the future. Over time, as we’ve grown as a firm, how counterparties engage with our EcoSystem has evolved and matured. Today they can do this both via direct relationships and on behalf of existing client relationships.
Our clients in the EcoSystem operate their businesses with increased scale and efficiency in distribution – that is why they are connecting via oneZero – and that in turn enables the support of an expanding list of trading products and services while lowering costs, speeding time to market, and solidifying win-win supply chain relationships.
Another repeat win for oneZero in 2023 was recognition by Inc. 5000 as one of America’s fastest growing private companies, along with a Business Intelligence Group award for Best Place to Work. What does that mean to you as a co-founder and how are you maintaining oneZero’s culture as you grow?
Andrew: It means a huge amount to me and my co-founder Jesse Johnson, and indeed to the whole oneZero team. We have continued to add staff as we build our service capabilities and are now up to 170 team members globally. That inevitably imposes some changes on the way we run the company, but we are also working very hard to retain our unique culture.
I was thrilled that we were able to revive our annual team building retreat – Camp oneZero – in the New Hampshire woods this spring and also that we had record attendance, both in overall numbers and in team members arriving from outside the US, many of them relatively recent joiners.
How would you define what is unique about oneZero’s culture?
Andrew: oneZero is a technology-first company that was founded by technologists and prizes analytical innovation and customer service above all. That helped us to establish oneZero as a key partner to the trading markets – first in retail FX brokerage and now with a growing range of institutions – because we are not tied to legacy habits of thinking of vested financial interests.
We are genuinely liquidity neutral and independent. A shared approach to problem solving is a key part of this culture and I was pleased that new team members from Europe and Asia were keen participants – and winners – in our friendly competitions at Camp oneZero.
Steve: I can confirm that I was one of the participants and even managed to rank among the joint winners. That has been one of the pleasant surprises about joining oneZero – the commitment to teamwork and innovation is genuine and there really is a unique culture here. The focus on technology that serves business goals is a major differentiating factor for oneZero.
The build out is continuing in multiple regions of the world then – where is oneZero expanding its presence?
Andrew: We have continued to add a number of experienced staff in London, including Julian Gay, who joined us as director of institutional sales for EMEA. And Asia remains a focus too – in Hong Kong, Singapore, Tokyo and elsewhere. I recently spent time in our Sydney office, which is the hub for much of our Asia-Pacific activity, and visited our new development center in Canberra.
It was particularly gratifying to see that we are gaining recognition from clients across the world for this move to expand our service capabilities.
oneZero was named Best FX Technology Provider and Best FX Aggregator in the FX Markets Asia Awards this year, for example, which is a testament to the great work that our EVP Alex Neo and the rest of the Asia-Pacific team are doing to help clients.
Which conferences have you already attended, and where can we expect to meet the oneZero team for the rest of the year and into 2024?
It is a long list! We have attended conferences in every region and upcoming highlights in October and November include the Full FX at The FIA Expo in Chicago and Full FX in London along with FX Markets USA in New York.
There is growing demand for conferences that bring together institutional clients of all types and in terms of regional appetite there is a huge interest in meetings in Dubai, such as the Forex Expo Dubai 2023 in late September.
Our focus is simple: meet as many actual and potential clients as possible to explain how oneZero’s FX technology solutions can help to boost their own performance.
There is a growing appetite for oneZero’s EcoSystem as clients come to appreciate the benefits of using our secure, ultra low latency network to connect with a wide range of key partners