The Middle East has played host to a range of developments in the world of trading in a relatively short time, the majority of which have been the emergence of executing venues and exchanges such as the Dubai-based DGCX. The Emirates is a region which understandably had a requirement for commodity exchanges, as Dubai is a world center for gold and has a population of wealthy investors.
Within the United Arab Emirates, Abu Dhabi has, along with Qatar, often been considered by the west as the next Dubai. Emirati exchanges and forex brokerages are often inward looking and this can be characterized by DGCX’s rupee futures contract, which has posted constantly increasing volumes thus demonstrating the exchange’s South Asian focus.
By contrast, while not forgetting the requirements of its important Middle Eastern clients to which it offers the PRIME high-net-worth service in the GCC region, Abu Dhabi based ADS Securities has forged ahead with partnerships with western companies such as FlexTrade at the end of last year in order to offer a global FX enterprise trading solution, and subsequently Corvil in order to monitor ADS Securities’ new Orex FX platform.
In addition, ADS Securities has significant business in the Far East, and in this week’s Executive Interview, Forex Magnates speaks to Derrick Ngor, General Manager for Singapore at ADS Securities (ADSS).
Derrick Ngor started his career as a client servicing manager with the Citigroup Private Bank before moving on to a credit risk function with UOB Bullion & Futures Limited, then subsequently spent more than four years with Saxo Bank’s Asian subsidiaries in Hong Kong and Singapore.
As General Manager, he considers his experience in setting up new business lines and process re-engineering vital to his career.
Upon joining ADS Securities, what did you wish to change for the better, and how did you go about achieving it?
“ADSS has the financial resources to achieve its ambition of becoming a global financial service provider this is extremely rare in the current market conditions. I realised when joining ADS Securities that the company was focused on developing the technology required to deliver execution and price”
“As a new division of the company, my immediate key tasks was to establish Singapore as ADSS’s APAC hub and to put in place a well organised structure to services its existing affluent client base in Asia.”
“ADS Securities is focused on working with regulators to enter new markets. In Singapore and across Asia this has been one of the biggest challenges. The Singapore office has put a lot of time and resource into developing the necessary relationships.”
A year has passed since the launch of the PRIME service by ADS Securities. Please elaborate on the results so far, and if there are enough high net worth individuals and professional traders who operate on an individual basis (UAE has a high proportion of group traders) to make this viable, and what is the next development for PRIME?
“PRIME is at the moment only marketed to the GCC region and has already exceeded our expectations. It is a premium product designed for HNW traders and they appreciate the benefits it provides. We always said that we wanted to develop a service for individual traders with institutional standards of service. “
“At the moment traders get offered a lot of headline prices – as low as 0.4 pips per trade, but our clients understand the support that we provide. Prime offers low prices and commission free trading, but we really concentrate on consistent pricing and execution. We focus on making sure that clients can trade when they want at the prices they want with the standard of support they should expect.”
“We are now looking at launching Prime in a number of new markets. We know the product is very successful with private traders so will expanded the offer on a global basis.”
What are the important markets for the FlexTrade white label? Is it intended for international or domestic clients?
“Our Orex platform (FlexTrade white label) has been designed for institutional traders with the flexibility to be adapted to individual trading requirements and styles. “
“Designed to offer lower latency trading services to high-frequency and high volume traders, Orex accommodates a range of tickets sizes while providing ADS clients with access to multiple sources of premium foreign exchange liquidity.”
“In particular we offer the ability to create liquidity pools tailored to the needs of individual traders which can include tier 1 bank, non-bank and unique liquidity from the GCC. This is delivered through a low latency network with servers in all key markets.”
The Orex platform is an interesting choice. What was the reception like in the home market for the Orex platform considering that the MT4 platform is widely used in the Middle East?
“The Orex platform is for institutional clients and has been very well received in the region owing to its low latency and excellent pricing. For Middle East clients they like the fact that we provide the technology they want from Abu Dhabi, with regulation from the Central Bank of the UAE. With the issues over Cyprus and concerns about where funds are held, the opportunity to work with a well-capitalised company in a safe and secure market is important to them.”
“MT4 is still the platform of choice for our PRIME clients (i.e. individual traders). We provide access to our deep liquidity along with multilingual support teams and proprietary research and analysis, which has proved extremely popular.”
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The partnership with Corvil at the beginning of the year in which the company provided monitoring of the Orex FX platform hints that HFT is a target market for ADS Securities. What advantage is there in going after HFT business? Is the model geared toward low spread/high volume? If so, how can the company remain competitive and still turn a profit?
“Corvil has been brought on to measure and monitor our new platform (SDP) which will be launched this quarter. This will also offer advantages to HFTs, however for this group of traders we have set-up a standalone server in NY4 which is dedicated to algo traders.”
“Orex is also designed to offer lower latency trading services to high-frequency and high volume traders, Competition is very stiff in the institutional space and low spread/high volume is the only way to have a market share.”
“Our approach has been to make sure that we can offer the right type of liquidity to this market group to support the volumes of trades they put through. In this market you need to carefully align products to clients.”
Is the ability to provide reliable trade monitoring a selling point that ADS can use to drive traders toward the Orex platform, and on this basis how does the company’s target client base differ from HFT traders who would select a more familiar platform?
“We want clients to know that we are investing in the monitoring and development of our technology. Corvil work with some of the most significant names in the market so as we introduce our new SDP we want to be able to show exactly what it offers to clients.”
“They will provide feedback on Market Data, Order Flow, Quote to Order Latency and Network Measurements to ensure the highest standards of service for ADS Securities and our clients.”
“Orex has been developed ahead of the SDP coming on line as we wanted to be able to offer specific services to clients. We are extremely pleased with the reception this platform has had and the volumes which it is now managing.”
The UAE has become a region with a proliferation of new commodity exchanges such as the DGCX. Will the region become more commodity focused, and if so , how will ADS maintain a share as an FX broker?
“We cannot comment on what other exchanges or brokerages are doing in the market. We already have a very strong regional bullion business and with the current volatility we are seeing clients accessing a much wider range of products.”
“The Middle East has historically traded equities, real estate and commodities and this mix is unlikely to change. There is often limited access to certain commodities, especially oil, so we are finding that investors want products like CFDs which allow them to diversify their options. We recently launched a unique Dubai Oil CFD, which has been very popular, and is one of the only ways regional investors can put oil into their investment portfolio, without looking at futures contracts”
Being in Abu Dhabi – Does ADS focus on the Middle East and Asian clients, or is it striving for a global presence?
“We operate across all the main markets. At the moment our business is split one third Middle East, one third Europe and one third Asia, but we expect to see more growth from Asia as we move into Q3 and Q4”
“However, the MENA region is our home markets and we want to maintain and grow our position as the leading FX provider in the region and to provide access top unique liquidity; the tightest prices and spreads; and the best execution to institutional and professional traders from around the world.”
Can you provide some information on the Abu Dhabi market, what are local firms in the area seeking in terms of prime relationships?
“The Abu Dhabi market is still developing. There is and will always be an appetite for trading in the Middle East but there also needs to be a process of education, so that traders feel more comfortable with FX and FX products.”
“Many investors have been used to very large percentage returns from real estate and it takes time for them to realise that in today’s investment markets FX and commodities are the areas for them to focus on.”
“We believe that there is a lot more growth to come especially as investors react to the measures taken by the IMF and ECB in Europe. They are very pleased to see the way that Abu Dhabi is growing as a financial services marketplace.”
What is the corporate direction for the rest of the year?
“Today we have announced a new partnership with a company called Pioneer Trader in the UK, who will be white labelling our institutional services.”
“This is just the starting point we have a number of strategically important announcements which will be made through the year as we expand our global foot print and offer more services to more clients.”
“We will also continue investment into technology and the launch of our SDP will be extremely important as this demonstrates our long-term commitment and on-going development of trading solutions.”