Forexware Vice President is Taking You Back to the Future

Finance Magnates sat down to chat with Fred Scala, Vice President Global Head of Sales at Forexware. With more than 35 years in the forex industry, Scala has a wide perspective and in-depth understanding of the global industry.

Please tell us about your background

"I was on the trading side for most of my career working at Tier 1 banks. I always joke that I was working on a trading desk when Jimmy Carter was President (it was only a few weeks as I started in the business in Jan 1979 and his term ended a few weeks later). I moved in to the e-Sales space 9 years ago helping FXCM Pro build out its Institutional platform.

For the past 4 years I’ve been the Global Head of Sales at Forexware. What really appealed to me at XW was the technology and solutions we were offering were things available to only Tier 1 banks a short time ago. Forexware was able to offer retail brokers a full dealing desk suite with functionality that was proven, reliable and cost effective. These were tools that were built by risk takers for risk takers to increase overall profitability."

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How do you see the current state of the FX industry in the markets you operate in?

"There have been 4 main pillars that have driven volume in the FX market over the past 10 years, the HFT funds, the interbank risk takers, the corporate hedging flow and the retail market. Over the past few years we’ve seen many events that have caused disruptions in each of these sectors. The regulators and Liquidity providers have frowned upon the HFT segment of the market and many of the original players have disappeared from the scene. Volumes in the interbank risk sector has taken a hit due to the recent scandals as well as the Dodd-Frank and Volcker Rule coming into effect.

Because of that banks have been less willing to take on risk the way they had in the past. That leaves corporate hedging and the retail market. Corporate hedging was and always will be the main factor in driving FX rates but credit for the retail market was shaken up after the SNB event last January. I believe growth still lies in retail sector but credit will be the most important factor. We’ve gone from full Prime Broker credit relationships to Prime of Prime solutions but this won’t really address the issue as cost has made it very difficult for retails brokers to keep spreads competitive. I think we will move back to a market where smaller entities will have direct margin relationships with one or two brokers that can offer them tight spreads with no or very small fees. Basically back to the future."

What added value do you offer clients to help set you apart from the competition?

"We have technology solutions that appeal to all sectors of the market. We offer our FX Starter Kit packages for entrepreneurs looking to start an FX brokerage business, we have a webtrader front end for anyone looking for an alternative to MT4 as well as bridge, plug-ins, hosting and support solutions for established brokers that need an upgrade in their technology.

For larger companies we have a full Dealing Desk Enterprise solutions which includes a Price Aggregator, Price Engine, Risk Manager and Back Office CRM. Our technology has been built by risk managers and upgraded over the past 15 years and we pride ourselves on our support team which runs 24/6."

What are the biggest challenges with managing an FX firm in today’s environment?

"I think the biggest challenges today are the same as they’ve been over the past several years; focus and attention to detail. An FX firm today whether it be retail, institutional or IT related is client facing. The separation point for most businesses aside from true technology differences is client support. We have to be attentive to the changing requirements of our client base as we build out new solutions over the long term but more importantly as we address the day to day’s issues that always pop up. We have worked hard to streamline our deployment group and get the client on-line as quickly as possible."

What are your goals for the company this year? What are your goals for the company for the next five years?

"In the past 18 months we have opened sales offices in Shanghai and Jakarta and we’ve seen tremendous growth there. Our hope is to expand our foot print and open a sales offices in Cyprus. With so many retail brokers on the ground we think that is an important step in our growth path."

What advice would you give a young person that has just begun his professional career in FX and hopes to reach a position such as yours one day?

"When I was a trader and I had to train young people in the dealing room I would tell them to go home put the radio on, turn on the television, read a book and try to concentrate on everything at the same time. There are many conversations going on in a dealing room and it’s very important to stay on track and keep updated on all of the price changes and risk positions. That exercise would always help young people to focus on many different tasks at once.

For my sales staff I try to impress on them that we’re not in business for the quick sale but rather for the longer term relationship. It’s more important to build a long term relationship with a client through an honest assessment of the needs then to try and sell them the solution we offer. For a salesperson in any field it’s much more important to listen than it is to speak. When you let the client speak you find out more about his business and his needs and then you can see if there is any way to add value, if not you move on. When you approach business this way you’re not viewed as a salesman but more of a partner and that is the way to be successful in any industry."