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. Continue reading Some Businesses Take a Really Long Time to Build, FX isn’t One of Them
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.
Continue reading FX markets are experiencing a paradigm shift and many are hurting. Don’t be afraid. What you are experiencing are growing pains.
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. Continue reading Not all Clouds Are Created Equal
The French web entrepreneur Loïc Le Meur identified “platforms” as one of the key technology trends at the World Economic Forum in Davos in January. American Airlines started to feel its power when combating Orbitz and Expedia. Apple recognized its value when it created the app store for the iPhone; and is now trying to repeat that success with the Mac store for its computers. Your kids are inhaling the many benefits of a platform through their use of Facebook. When Ford launched its efforts to change how people interact with their cars through SYNC® and MyFord Touch™, Ford is banking on the power of the platform to ensure drivers will enjoy an ongoing flow of updates and added services. To me, it sure looks like everything is becoming a platform.
Why stand-alone applications fall short
Stand-alone applications are a thing of the past. They just cannot compete with the cost effectiveness, flexibility, extensibility, innovation cycle and rapid time-to-market that platforms offer. An application is a closed environment that does whatever its original developers intended it to do, and nothing more. That is not sufficient for the demands of today’s FX markets. Continue reading 2011 — The Year of the Platform?