X Markets Trading recently secured the services of two former FXCM executives, Mark Davison and Michael Higgins, who were appointed to the roles of Director of Business Development and Global Head of Sales, respectively, as reported by Finance Magnates.
We spoke with both executives about their move and got an overview of their new employer, X Markets Trading – XMT (pronounced Cross Markets Trading).
Mr. Higgins and Mr. Davison shared that X Markets Trading (XMT) is a systematic trading and technology firm that specializes in quantitative foreign exchange (FX) and derivatives pricing strategies.
The company uses highly efficient ultra low latency infrastructure to access various marketplaces where it provides liquidity. The trading models and price formation is purely quantitative and has been developed over the past 15+ years. The team within XMT is made up of market veterans sourced from all areas of finance and academia.
We generate our own price from our quantitative research, provided by our team
XMT departs from HFT in the traditional sense, opting instead to abstain from latency arbitrage mechanisms and practices. “We want to make it clear from the onset that we are not in the latency arbitrage business. We generate our own price from our quantitative research, provided by our team, which is a 50+ strong group. The quant team is comprised of PhD researchers from the world’s best universities including MIT, Cambridge, Oxford, Harvard, Stanford, Columbia, Cornell and others and who have also managed flows at several of the top financial institutions.”
“In markets, speed is relevant and we do have the ability to hedge things in a high frequency manner one can say, given our ultra low latency infrastructure to ECNs and exchanges but again that is not what makes us unique. We are not trading only foreign exchange for example, but we run models across a wide range of different markets and active in commodities, STIR, metals and equities.” Davison and Higgins added.
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XMT has expanded into more asset classes, “We maintain the same capabilities to trade in different markets whether it be FX, commodities, equities, etc., as our team and models are multi-asset oriented. Our research and production environments are fully integrated and automated. Alpha conception to production is a seamless and fast process, allowing us to continuously adapt and improve at optimal speed. While we have an extremely low latency internal and external infrastructure, our quantitative strategies are paramount and give us a unique edge.”
Shifting gears slightly, both individuals trace the genesis of their career and FXCMPro, along with the decision to leave for XMT. According to Mr. Higgins, “I was at FXCM for over a decade working across a variety of different divisions, products, and services. Most recently, I was the Director of FXCMPro for Europe, Middle East, and Africa (EMEA) looking at a number of different operations. In addition to managing a team, I was looking at the FXCM Prime business and promoting the FXCMPro ECN and the FastMatch FX ECN venture.”
Mr. Davison paused his FXCM career by joining the ranks of Alpari only to return to FXCMPro in a capacity to re-engage top tier banks and institutional customers to be moved over to the FastMatch technology.
“FastMatch Inc was being separated from FXCM on all levels even down to relocation of offices at the end of June. This coincided with the approach from X Markets Trading and whilst I had every expectation that FastMatch would continue to grow and thrive, both Michael and myself couldn’t discard the golden opportunity that this new venture presented with a highly expansive product suite to offer to clients,” noted Mr. Davison.
XMT is in a position to work with a wide range of participants. This was an integral factor in making the move here.
Mr. Higgins echoed similar sentiments and explained that one of the exciting attractions of the XMT structure was that they owned their own quantitative alpha strategies and they have its own price formation. The company is not a broker and creates its own liquidity provision that can be customized for different clients across a variety of asset classes. “In FX as an example, different client types have very different liquidity requirements and therefore XMT is in a position to work with a wide range of participants. This was an integral factor in making the move here,” Mr. Higgins added.
Whilst discussing other market developments with the pair, it was highlighted that there has been a number of changes since the US financial crisis in 2008, such as the Dodd-Frank legislation that has restricted banks from holding onto proprietary positions. This now coupled with regulation and requirements for capital adequacy for certain kinds of financial institutions in holding large positions on their balance sheets present some unique opportunities for XMT. “We are looking to add value working with these financial institutions to help them manage their flow and get the risk off their balance sheet, whilst reducing the costs to externalize. Owning our own price and due to these structural changes in the market is what prompted the move to XMT, which was the result of the right confluence of timing and events,” both of our interviewees concluded.