oneZero Financial Systems has once again bolstered its Liquidity Hub, now offering a new deployable, full-scale matching engine. The upgrade is a game changer for oneZero, a leading provider of connectivity and risk management solutions for the FX, OTC, and derivatives brokerage marketplace.
Finance Magnates spoke with oneZero’s CEO, Andrew Ralich, to discuss the latest enhancement’s impact, as well as the future of oneZero. The group has already been highly active in 2017 with multiple initiatives and several marquee developments that have dominated headlines over the past few months.
In particular, oneZero rolled out a significant update to their Hub earlier this year, addressing broker demand for improved platform connectivity via API. Just a few months ago, oneZero also announced multi-asset capabilities that provided a means for brokers to offer equities and futures product lines alongside traditional FX and OTC products.
Finance Magnates sat down with Mr. Ralich, who outlined the new full-scale matching engine targeted at brokers looking to operate an exchange or ECN model integrated into oneZero’s globally distributed Hub technology.
Indeed, the terms exchange and ECN carry a varied definition depending on what area of the fintech world one comes from. Mr. Ralich previously defined a rough set of terminology back in 2014 as to what differentiated an ECN from a bridge or an aggregator.
Prior to this first-of-its-kind release from oneZero, the ability to ‘match’ firm client orders (limits, take profits, etc.) in a riskless fashion to the broker against other client limits had been non-existent in the realm of retail/wholesale hybrid connectivity and distribution solutions. This ability – for price takers to enter the order book and participate as a liquidity provider – is exactly what oneZero has delivered in this new feature, which they call ‘MatchMaker’.
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Finance Magnates spoke to Mr. Ralich who explained this feature; specifically, what it took to get to this stage and why they have chosen to prioritize this release:
“Exchange capabilities, including order matching and a true limit order book functionality, have been on oneZero’s radar for years. Something we’ve always seen as inevitable in the OTC and FX marketplace is sharp growth in the number of firms looking to act as a venue for true ECN or Exchange, and the resulting demand for a 3rd party technology solution to enable this.
Prior to the last 2-3 years, internalization at OTC brokerages dominated the feature demands for offsetting and managing client flow. In contrast, the modern regulatory environment has caused the pendulum to begin shifting back towards risk-less models of maintaining client order flow. As a result, the door has opened for firms like oneZero to deliver this capability off the shelf,” he noted.
Delving deeper, Finance Magnates staff pressed oneZero to provide high-level guidance as to whether this new model would be targeted mostly at oneZero’s existing client base or a new client segment.
“Running a central limit order book is a compelling prospect for individual Retail brokers, but does not provide a tremendous amount of value unless the broker externalizes a significant portion of their volume,” responded Mr. Ralich.
“We do see our Retail clients using matching to help strengthen their liquidity pools, but do not expect this feature to greatly disrupt the typical A-Book model. We are engaged in conversations with several potential CCP [central clearing counterparty] partners who are interested in building regional exchange operations, wherein multiple Retail brokers would meet to bilaterally exchange risk. And we have been working with a very select group in the cryptocurrency space who are using oneZero technology to build fully fledged crypto venues,” he explained.
This big reveal will surely be a topic of conversation at this year’s Finance Magnates London Summit, where oneZero Financial Systems will be attending for the sixth consecutive year as a sponsor. oneZero is also a candidate for this year’s ‘Best Connectivity Provider’ award, with the latest addition sure to catch the voters’ attention.