Dmitri Galinov has stepped back into the FX industry with a bang and kindly agreed to share some more details about his new venture 24 Exchange. Starting from the obvious, the inspiration behind Galinov’s move into FX derivatives trading has stemmed from the fact that while technology costs have been consistently declining, market access for exchange members has been becoming more and more expensive.
“24 Exchange is here to solve the problem exchange members have with rising costs of market data, clearing, and margin. Banks, hedge funds, all exchange members should be able to access the market at a price which is considerably below current rates,” Galinov explained.
Ballooning costs in trading FX derivatives have also been driven by rising trading costs, exchange membership fees, compliance, and other factors. To cut the costs, Galinov proposes to use the existing infrastructure of members, who are already widely using the same FIX API protocol regardless of whether they are trading FX, bonds, stocks, or commodities.
“Whether you are trading an FX NDF, greek bonds or US stocks, the difference in the subset of the FIX API protocol used is very subtle, with only about 5 percent variation. With all participants already having agreed to use FIX API, the opportunity for cost savings is there,” Galinov thinks.
Welcoming Different Vendors
24 Exchange is set to welcome a number of technology vendors, thereby allowing the company itself to be very flexible with its costs of operation. The lean and mean team which Galinov is starting with comes with a raft of experience. As we have already reported, the veteran industry executive is joint by tow other seasoned professionals in the field.
“We don’t need a big tech team – all we are doing is integrating existing vendors into our network,” Galinov explained.
That said, Paul Millward and Jason Woerz have joined from CBOE and Bridgewater to take senior positions at 24 Exchange. Paul previously helped build NDF products at GFI, Hotspot, and CBOE.
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Jason will be leveraging his global multi-asset execution management experience and industry contacts and will take the initial position as President to co-manage 24 Exchange with Galinov.
By using a multitude of vendors, existing exchange members will be able to access our platform very easily. It would be as simple as switching the flow and realizing massive savings with no market data fees,” Galinov explained.
The company also has planned to take care of credit relationships, which are key for the FX derivatives market. The founder and CEO of 24 Exchange said that the firm would be interacting with members much more efficiently, by using a central prime broker that is a major bank.
24 Exchange is set to begin operating later this summer in August. Galinov explained that the firm is in the process of finalizing its initial funding round with a number of interested parties at the table.
The company plans to start with NDFs and move into other products. The initial focus is on minimizing interest charges, while using an anonymous solution and making the margin costs much smaller, which is key for the NDF market.
“We hope to improve overall liquidity in the NDF market, by decreasing friction costs,” Galinov shared.
With the company being domiciled in Bermuda, trading will be off SEF. 24 Exchange will not have US clients as members, instead, they will be able to gain access via a non-US-member of the exchange.