London Summit 18 Spotlight

Are ‘Distractions from Core Businesses’ Stifling Progress in the Industry?

"Fragmentation was going to be the end of the banks in terms of market making, but it hasn’t so far

With August soon ending, the focus continues to shift towards the 2018 London Summit, which takes place in a few months. Finance Magnates sat down with some of the event’s leading speakers to delve into the topics and areas of focus ahead of the summit on November 13-14. In this piece, we focus on the recent changes to the FX retail market.

While regulation has taken center stage in both the retail and institutional space, one component that has gone under the radar is the role of fintech firms in this transition. The precise role of these companies is currently being redefined in terms of FX. Hormoz Faryar, Global Head of Institutional Sales at Equiti Group, gives his take in a brief interview.

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What does your role at Equiti Group entail?

“As Global Head of our Institutional Sales, my role is to bring the latest platform technology solutions to the global institutional client base of Equiti group. As the market is developing ever faster we need to constantly convey the message of best execution (proof that the trade done was at best price and done with speed and transparency) and price discovery tools (before and after trading tools to help understand the trade execution path).

The most important part of my job is to make sure our clients are setup to beat their competitors in their own space. ‘Beating their competitors’ means that we strive to have our clients have better pricing and larger volume than their competitors.”

What has been the single most important market event or development in 2018 so far?

“The biggest event of 2018, in my view, is distractions from core businesses. Both new regulation and emerging technologies, like cryptos, have in my opinion distracted some of the players in the market from their core goal.”

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How, if at all, is demand for cryptocurrency changing your business, in terms of operations, relationships, or technical adjustments?

“Equiti group re-evaluates its crypto strategy on a quarterly basis. We are at this stage following the regulator and our global bank partners’ guidance. We don’t offer cryptos yet, but we do have a crypto strategy that can be implemented on short notice.”

What role does fintech play in FX liquidity creation and aggregation, and which areas are ripe for disruption?  

“Fintech companies have always attempted to lessen the market frictions (issues that make a process or transaction unnecessarily tedious), increase speed and implement innovation. In FX, this has meant that the markets became bigger but also more fragmented. Trade order sizes have become smaller over the years, but volumes have naturally grown.

Fragmentation was going to be the end of the banks in terms of market making, but it hasn’t so far transpired. The major banks and a handful of non-banks are still getting the lion share of this fragmented but growing FX business.

Fintech has the chance to change this, to some extent, over the next decade.”

How can brokers use the current liquidity landscape and new product innovations for growth?

“Equiti Group sees an opportunity to be a major global player across client types and across a wider range of regions. We believe that by being truly global and by using the latest technology (rather than build all of it), and with analytical tools and other innovations in the liquidity space, this can be used to the benefit of our clients.”

Hormoz Faryar will be speaking at the upcoming 2018 London Summit at the ‘Liquidity in FX and Beyond’ session. In this talk, executives across various areas in a fragmented currency market will team up to discuss the touchpoints of retail brokers and institutional LPs, as well as the impact of MiFID 2 and smarter analytics on execution. Learn more and register here today!

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