London’s substantial institutional FX industry relies heavily on proprietary platforms which are often developed in-house by large financial institutions, with high development costs and long development periods.
Based within the Square Mile, platform technology firm Caplin Systems announced today the launch of Core FX Motif, a tool which is designed to establish ready-made starting points for building single-dealer platforms.
The painstaking endeavor which many banks endure when operating such platforms was highlighted to Forex Magnates in June this year, when Jaqueline Liau, FX Prime & Global Head, Product and Service at HSBC explained during a panel discussion. Many banks have plowed development costs into bringing multi-dealer platforms to fruition, and therefore, are compelled to run with them, but, according to Ms. Liau single-dealer platforms have an important role to play in ensuring interactivity with banks’ own clients.
During the panel discussion, which included senior industry figures on the institutional banking side of the business, as well as executives from trade processing firms, Ms. Liau explained that, “A lot of banks have spent a vast amount of time and energy on multi-dealer platforms, but they cling on to single-dealer platforms as a way to link into their clients. The single-dealer platforms will have to evolve, including smart order routers so that they can send the order into a SEF or other single-dealer platforms, and they should offer algorithmic trading so that traders can access multiple SEFs”.
According to Caplin Systems, the new Core FX Motif reduces the cost of building an online FX trading offering, sometimes by approximately 75%, and reduces overall time-to-market from an industry average of one to two years, to typically, three to four months. It can be integrated with any FX trading system.
Caplin Systems’ FX Motif Product Owner, Peter Rayner, made a statement today on behalf of the firm, as to where the product fits in within the institutional FX sector. “The key elements of a good FX trading front-end are well known; quick-trade tiles, price grids, deal blotters, and RFS tickets,” he said.
“Our Core FX Motif provides all of these in a form consistent with industry best practice, and we constantly enhance and improve it. Choosing the Core FX Motif as a starting point means that you instantly have all of this functionality at your fingertips, ready-to-go right out of the box,” Rayner added.
Ms. Liau detailed that a time cost as well as a fiscal one, resulting from maintaining and upgrading single-dealer platforms to ensure compatibility with regulations, such as the Dodd-Frank Act and EMIR, will mean that the FX industry may have to make updates to platforms.
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She explained that, “Order routers and connectivity between single-dealer platforms are relatively common in equity and futures, but not in FX. Many banks are looking to do this with single-dealer platforms at the moment. Also single-dealer platforms are going to start to learn how to do post-trade reporting, research, and risk analytics. This way, it becomes more than just a principle to principle platform, and is more than just a means of processing peer to peer transactions.”
“We are going to see a rise in the quality of platforms from banks. It isn’t going to be so much about speed and latency, I think there are a lot of other services which need to be set into single-dealer platforms, meanwhile, we cannot afford to ignore multi-dealer platforms.”
Caplin Systems considers the low margins and narrow spreads as an important factor to consider, as margins are tighter, therefore, creating a need to save development costs within the industry as a whole. This has resulted in a competitive battle which has shifted to the quality of the user interface, with speed, responsiveness, reliability, ease-of-use and richness of features, all vital parts of a compelling offering that will attract and retain clients.
Caplin Systems studied a series of FX Trading GUIs, and incorporated its findings into the Core FX Motif.
“If you are developing a new FX trading GUI, you are faced with a daunting challenge,” stated Caplin Systems’ CEO, Paul Caplin.
“The time, effort and cost required to create a user interface of even average quality often means that little, if any, resource is left over to add the features and innovations that will differentiate you from your competitors.”
“The Caplin Core FX Motif solves this problem. It provides all the core features found in today’s best FX trading offerings, in a form that is exceptionally easy to style, customize, modify and extend. It gives you the freedom to create a trading GUI, limited only by your imagination,” concluded Mr. Caplin.
Caplin Systems built the Core FX Motif using HTML5 and provides an open customization facility, a direction which other firms have also been following when it comes to facilitating ease of platform upgrades.
At this year’s IFXEXPO in Cyprus, Alain Broyon, CEO at Dukascopy Bank, explained in a discussion panel on technology, that he is in the same camp, however, he considers it important for certain popularly requested custom objects to be provided as an integral part of the platform. He explained that, “The Jforex platform is built with different interfaces that can be set by the broker. Every platform should have a detail that is different, to help it be global and allow the technology to be in line with regulation.”