Posted: November 21st, 2012 | Author: Harpal | Filed under: Cloud computing, Margin FX, Retail FX, Software-as-a-service, Uncategorized | No Comments »
This week’s news about Alpari partnering with Integral highlights a larger trend: Margin FX brokers are choosing Integral as their business solutions provider. The combination of access to liquidity, rapid time to market, no upfront costs, the flexibility to pursue the business model of their choice and the assurance to have all key elements under their control is hard to beat.
As a neutral technology provider that offers a fully managed end-to-end solution, Integral offers a unique value proposition that resonates with our customers.
It’s a technology arms race
Global foreign exchange markets have become a very competitive business and in it managing a margin FX brokerage is no exception. Therefore, having the right partner at your side is extremely important.
We invested in technology solutions complete with a network of liquidity providing banks, ready today and available for margin FX brokers to build their own private FX exchange, and to deliver branded trading services to their retail customers.
The power of cloud computing
All our services are delivered in the cloud, offering the advantages of this business model such as dramatic cost savings through a shared technology platform, on demand services that scale elastically in line with our customers’ business needs, and a pay-as-you-go business model.
Since we don’t charge any up-front costs, we only get paid a small token every time one of our customers executes a trade. This is very different from the traditional purchase-and-install software model and ensures that the interest of both Integral and its customers are aligned.
We work with margin FX brokers to assist them in assembling their own liquidity from multiple banks. If those banks are already on Integral’s FX Grid® – and many are, then established connections are in place. Connecting once to Integral is all that it takes to be ready for connecting to other participants. In the rare event that a connection doesn’t exist yet, Integral will research the particulars of that situation and even build it on behalf of our customers.
As importantly, we will ensure that these connections continue to stay up and working. We’ll track the many changes that the liquidity providing banks make on their end and ensure that service to our customers is not interrupted. It all contributes to the high availability of our trading network.
You are in control
Our various cloud services add up to an end-to-end solution that includes everything FX brokers require to run their own business. Since it is delivered a la carte and not as a fixed bundle, brokers can pick and choose. They end up with everything they need and nothing they don’t. That includes the option to take advantage of FX Inside Professional™, our execution management system (EMS) for the broker’s professional customers.
Since nobody knows their business better than they themselves, we offer our broker customers real-time analysis and administrative tools so that they are in full control of their FX business. That way, they can customize solutions that specifically fit the needs of their various customers.
A new reality
The time of one-size-fits-all solutions in FX is over. FX market participants demand a technology solution that fits their business, not the other way around. They further require the tools that put them in control of their FX business. Integral understands and supports this trend. Our rapid customer growth is testament to the fact that what we offer resonates with the market.
Posted: October 29th, 2012 | Author: Harpal | Filed under: Cloud computing, Margin FX, Platform-as-a-service, Retail FX, Software-as-a-service | No Comments »
1. What is the biggest change you have seen in recent years in FX markets?
The biggest change must be how technology has lowered the barriers to entry for many new market participants to enter and thrive in the global foreign exchange market. What was previously an extremely fragmented, disconnected, opaque market is transforming into a more diverse, integrated, and transparent market.
2. People are talking about a technology arms race in FX. With that said, does anyone other than the largest and best capitalized players stand a chance to compete at all?
Yes, it is true that in order to compete and win in this competitive FX market, one must make use of very capital-intensive technology infrastructure. It does not mean, however, that one needs to build and own that infrastructure themself. The Integral shared platform and the cloud services are on par with or better than any other technology solution out there, at a fraction of the price and with far less risk. The game has changed and as in other industries, the introduction of a shared technology platform has dramatically leveled the playing field.
3. What is your advice for market participants with large off-line or telephone-based businesses who are considering going on-line?
The good news is that today’s technology can deliver discrete functionality similar to what human traders or salespeople can do. Integral has a track record of helping banks and brokers launch their own FX platform, basically for free and with very little risk. It can happen with no capital expenditures on their part and can be deployed in a matter of weeks, because they benefit from the pre-existing connections with all major sources of liquidity and prime brokers that we have aggregated over many years. And, given that they have no ongoing fixed expenditures, they have no running costs to worry about. So why wouldn’t they go electronic now?
4. How is Integral different from other technology solutions?
We are a neutral service provider. We are not and will never be a bank or a broker, nor do we transfer the risk of a successful implementation to the customer. While this seems like an obvious distinction, it carries many ramifications that may not be as evident. The biggest difference to the traditional license-and-install software vendors is that we enter into true partnerships with our customers. The basic reason lies in the way we are compensated: Integral charges a small service fee on any trade our customers execute on our platform. If customers are not trading, we are not getting paid. If customers are not happy with the system, we are not getting paid. Therefore, our interests are fundamentally aligned for the short and long term. We want them to be successful and to expand their businesses.
5. What is your position on the discussion around platform proliferation?
I think that these new platforms are a great addition to global FX markets. Actually, they are a great indication of the technology revolution that has been taking place over the last few years. Today, technology has advanced to a point that mass customization is now practical and economically feasible. Modern cloud-based service offerings, like Integral, can automate what you have exactly the way you have it. What we are witnessing is that many off-line FX businesses are moving online by embracing e-FX. It’s a trend that we applaud and one that I think will continue.
6. With lower volumes, regulatory pressure, many new competitors, is this a good time to start your own FX brokerage?
If you have a solid business idea, if you are committed to great customer service, and if you’re marketing organization is top notch, there has never been a better time to venture out and compete in FX. There is more transparency than ever, the barriers of entry are lower than ever, and with the right technology partner, you can focus like never before on customer service and acquisition. If you have any questions, give us a call so we can discuss your opportunity in more detail.
7. What is cloud computing and how can it help me?
Cloud computing is a new paradigm that has dramatically changed many industries, including FX. Its key characteristics are the use of a shared IT infrastructure and a pay-as-you-go business model. Previous static technology products with fixed functionality have been replaced by flexible cloud services that you subscribe to on an as-needed basis. What all that adds up to is a business model with virtually no fixed costs, no CAPEX, and the built-in flexibility to change as your business needs change.
8. Where do see the future of white labeling?
Generally speaking, I see a bright future for white labeling, but it will be slightly evolved. Clearly, I don’t see many new proprietary platforms emerging that are not in one form or another based on a common underlying technology. In light of the quality of technology solutions that are available already, it just doesn’t make sense given the costs and time required to build something from scratch. I am hesitant to call this ‘white labeling’ since it is so much more. White labeling, how it came to be understood by most people, describes the licensing of somebody else’s technology platform and somebody else’s liquidity – without any real chance of making it your own. The new kind of white labeling, how we understand it, puts the business owner in control of key elements and allows for far-reaching customization of the technology tools to fit that business owner’s preferences. FX has come a long way from the one-size-fits-all white-label offerings from years past.
9. What is your position on the principal vs. agency business model?
The debate in the market is sometimes very heated, with different people making absolute statements for or against either one. In my view, both models have their respective merits. Our platform supports both, and at times even for different customer segments under the same brand. And that is the best news: You don’t have to take sides. In the end, your customers will tell you whether they want what you’re offering. And if not, and if you are one of our customers, we will help you adapt to better serve their needs; because that is the most important debate of all.
10. What has been your proudest achievement as CEO of Integral?
The fact that we helped launch more than 200 and counting FX platforms that are all unique, customized businesses that vary in market structure, value proposition, target audience, user experience and business model, all branded under the name of our customers. As far as I know, no one other than Integral offers technology that can support the variety of platforms on a single virtual SaaS system. That’s where we think we have accomplished something that fundamentally changes the economics of the FX service provider market. This is not unlike the effect that the introduction of Lotus 1-2-3 and MS Excel had on the financial software market: One system, provided by a technology vendor, extremely customizable, with virtually unlimited applications designed by and “owned” by the customers themselves.
PS: If you’re interested in the business of margin FX trading and want to learn more about what Integral can do for you, click here.
Posted: September 17th, 2012 | Author: Harpal | Filed under: Cloud computing, Platform-as-a-service, Software-as-a-service | 1 Comment »
Just as I was looking for a new idea for how to tout the advantages of cloud computing in a different way, Deutsche Bank comes around and does it for me. And, they do it in a very convincing, 20-minute-long video that is very professionally done, featuring senior executives of their FX organization, both from the business and the IT side.
Granted, they talk about open source and we are talking about cloud computing but these are only different paths up the same mountain. The mountain is called shared IT infrastructure. The ultimate benefits for the end customer are increased operational efficiencies, dramatically reduced costs and lower barriers of entry. And they are the same with both approaches.
What the executives say as well is that the do-it-yourself model is dead. Kaputt.
Read More »
Posted: August 15th, 2012 | Author: Harpal | Filed under: Cloud computing, FX Aggreation, Platform-as-a-service | Tags: FX Platform | 1 Comment »
The head of the United States Patent Office, Charles Duell, is credited with arguing in 1899 to close the Patent Office because “everything that could have been invented, has been invented.”
In the early 1940s, IBM’s president, Thomas J Watson, reputedly said: “I think there is a world market for about five computers.”
Jon Corzine, then-CEO of MF Global, in a company-wide email after a downgrade by Moody’s wrote in late October 2011: “While I am disappointed by this action, it bears no implications for our clients or the strategic direction of MF Global.” And: “The sun will come up tomorrow.”
In July 2012, one can read in an article in FXWeek that “The flurry of new trading platforms that have launched in the foreign exchange market in recent months is unsustainable …and will undoubtedly lead to further consolidation as the successful ventures are acquired and the unsuccessful ones are pushed out of the market, according to speakers at the FX Week USA conference in New York last week”.
Leaprate.com echoed this sentiment stating that “It is also hard to believe that all these firms will each build up enough volume to create worthwhile businesses.”
If you started out chuckling about how woefully shortsighted some people were in previous centuries, you can tell by now that we have comfortably arrived in the present and the current discussion about the proliferation of FX platforms. Are you still smiling? I am not. It baffles me to read story after story about ‘platform proliferation’ as a result of a measly 6 new ones that were announced by a variety of industry participants in the last 2 months. In that time frame, Integral alone launches that many and more on behalf of its customers. Read More »
Posted: August 7th, 2012 | Author: Harpal | Filed under: Uncategorized | Tags: Olympic Games | No Comments »
The Olympic Spirit is alive in FX Markets. There are more than just a few similarities between what is happening in London and developments in global FX markets. Consider a few key characteristics and draw your own conclusion.
Reason #10: Foul play can lead to disqualification
London 2012: A Swiss and a Greek athlete sent home for racist tweets, other athletes leaving suddenly due to ‘illness’ that is rumored to be linked to doping
FX Markets: Google CFTC and enforcement or go here: http://www.cftc.gov/LawRegulation/Enforcement/EnforcementActions/index.htm
Reason #9: Audience participation
London 2012: In many venues, many seats are empty and emergency measures are in place to fill them
FX Markets: Semi-annual survey data for FX spot shows that here also, volumes are down in double-digit numbers in key arenas
Posted: May 21st, 2012 | Author: Harpal | Filed under: Cloud computing, Platform-as-a-service, Software-as-a-service | Tags: cloudcomputing, Euromoney, FX Grid, SaaS | Comments Off
Recently, Euromoney Magazine published its annual FX Survey 2012. Whether or not you like the survey and trust its findings, at least there is entertainment value in the media coverage that discusses the results. A very entertaining article in the Wall Street Journal provided insights into the great lengths that several participants went to drum up support for their institutions. But there are statements from some of the protagonists that make me smile. Here are two examples:
“Instant results are difficult to achieve in foreign exchange.” (…) Coming in, you need to invest for three to five years before you see results on the scale that the top handful of banks have been [having].”
It’s a matter of perspective but I disagree. There might be some businesses that require multi-year investments before delivering results but FX is not one of them. I can think of a few wineries in Napa Valley where new crop has to mature for years before delivering world class product. Virgin America, on the other hand, launched an entire airline in three years. They achieved this by leveraging a variety of third party service providers to assemble their final product in record time. Likewise, launching your FX business need not require multiple years of investment to deliver a world-class FX product to the market. It can be as simple as setting up a network connection to Integral. You can be up and running in weeks. More complex deployments on FX Grid® might require several weeks or a few months but nothing in the neighborhood of three to five years. That’s just wrong. If you’re in the middle of such a project, consider cutting your losses and give us a call now. Read More »
Posted: March 30th, 2012 | Author: Harpal | Filed under: Cloud computing, FX Aggreation, Liquidity, Platform-as-a-service, Risk Management, market maker | Tags: change, FX markets, market growth, market makers | 1 Comment »
Reading industry-related headlines over the last eight months or so must have been scary. Volumes dipped to historic lows towards the end of last year and some major players including many market making banks and large ECNs have been experiencing internal reorganizations with the associated departure of high-profile executives. Let me state for the record that this is not an attempt to judge anyone as they are going through tough times. This is an attempt to put what is happening into perspective and provide FX market participants with a better understanding of what we are experiencing. Where many see only gloom and doom, I also see a story about opportunity and growth.
One-size-fits-all era is coming to an end
In a recent commentary on personnel changes at EBS, Colin Lambert, Profit & Loss (restricted access), puts the finger for the firm’s difficulties at “increasing competitive pressure” and suggest among other things that EBS is “feeling the squeeze from internalisation and more granular streaming from banks”. I don’t want to make light of what this may mean for individuals affected by these restructurings, but for the industry as a whole, these changes are a positive sign. They prove that FX markets are maturing, that competition is increasing and that the one-size-fits-all area in FX is coming to an end. The future will see a much larger number of different business models, liquidity sources, risk management approaches, FX exchanges, all co-existing in an even larger market than FX is today.
Read More »
Posted: December 14th, 2011 | Author: Harpal | Filed under: Cloud computing, Uncategorized | No Comments »
If you missed last week’s webinar on the power of cloud computing in FX, I encourage you to listen to the recording here. The panel discussion that included Joe Conlan from FCStone; Javier Paz, an analyst with Aite Group; and me, was moderated by Saima Farooqi, the executive editor of FX Week.
In what I believe was a lively exchange between a provider of a cloud-based platform, a user of such (FCStone) and an analyst who ponders these developments from a more academic point of view, we touched on all kinds of issues from the theoretical to the practical.
I hope you’ll get a lot of ideas for how cloud computing could deliver for you. I am looking forward to hearing about them.
Posted: June 6th, 2011 | Author: Harpal | Filed under: Cloud computing, FX Aggreation, Platform-as-a-service, Software-as-a-service | Tags: cloudcomputing, FX Grid, PaaS, SaaS | 1 Comment »
Not all clouds are the same, and I am not talking about the different ones you see up in the sky. The term cloud computing has reached true buzzword status by now, with everyone having a different understanding of what it means — which by the way is one characteristic of a buzzword.
I don’t want to add to the many interpretations of cloud computing out there, rather outline the most important characteristics that in my view define it: 1) Market participants receive and deliver services over the Internet. 2) They are sharing a common pool of IT infrastructure. 3) They have the ability to easily scale these services up or down in line with how their business needs change. 4) They pay for these services in a pay-as-you-go business model and, and 5) these services are managed by a provider. If all these statements are true, you are looking at a real example of cloud computing.
Today, Integral announced an open platform for FX. While ‘open’ to some might just be yet another buzzword, it is critically important in this context. Read More »
Posted: May 25th, 2011 | Author: Harpal | Filed under: Pension Funds, Regulation, price discovery | Tags: Pension Funds, price discovery, Regulation | No Comments »
On May 23, the Wall Street Journal published a front page story: “Inside A Battle Over Forex” by Carrick Mollenkamp and Tom McGinty.
“Bank of New York Mellon Corp. has been fighting accusations that it took advantage of clients while trading currencies,” it began. “A Wall Street Journal analysis of more than 9,400 trades the bank processed over the past decade for a large Los Angeles pension fund could provide ammunition to its critics.”
The article advances recent reporting about lawsuits filed by public pension funds against custodian banks, alleging that the banks had fleeced the public funds on fees by filling FX trades at disadvantageous (though arguably legal) prices over many years. The Journal’s article of May 23 seems to offer proof. The newspaper filed a freedom of information request with the Los Angeles pension fund for its FX trading records and examined more than 9,000 trades. Even the bank in question “confirmed the accuracy of the data and said the bank’s employees ‘tend’ to price foreign-exchange trades at one end of each day’s “interbank” trading range…”
Particularly interesting is the bank’s response that clients like the Los Angeles pension fund knew—or should have known—that the bank doesn’t act in their interests when pricing the trades.
There will no doubt be further calls for increased regulation to induce change in FX market practices. But in my view more powerful and faster remedies are education and the use of available technology to fight imbalances caused by information asymmetry.
Yes, global foreign exchange markets are opaque and difficult to navigate but technology has greatly increased transparency. On our system, pension funds can see their custodian bank’s price feed and those of its competitors, in real time, on one screen and draw their own conclusions. By bringing to bear all the advantages of modern technology, including access to a shared IT infrastructure, data centers, and support, we have dramatically lowered the cost and barriers of entry for new market entrants to deliver a highly competitive global FX offering. My advice to pension funds is that if your particular provider is not competitive, switch to an institution that is. Multi-venue platforms like Integral’s FX Grid are aggregating and displaying prices across the market from hundreds of sources of global FX liquidity and offer a clear alternative to the single-bank systems like the one on exhibit in your article.
The combination of free historic data and real-time market movements are sufficient to help pension funds become educated and turn themselves into informed market participants. As importantly, a price provider on our platform knows that they are always doing it in competition with others. Thus, competition is built-in. What better way to ensure fair treatment through market self-regulation?
To paraphrase a famous philosopher: “Fleece me once, shame on you. Fleece me thousands of times a day, shame on me.”
Here’s a link to the original article.