GlobalLink Consolidates Platforms, Doubles Down on Data

It’s peak migration season, not just in the Masai Mara but also in the world of FX platforms: major players in the industry have either seen major technology shifts or they are watching their senior executives trek to new pastures.

Both of these are true of State Street’s electronic platform business GlobalLink: Kate Lowe departed the firm after six years in her role as global head of FX, with Chris Matsko assuming the position on an interim basis, until a permanent replacement is found.

Meanwhile, FXConnect, the platform, has completed its three-year tech migration and its leaders are in the process of encouraging clients to move to the web-based plumbing and away from the ancient code-jungle of Java. “That’s been our number one key deliverable and it’s been very well received from our client base so far,” Cathrine Poulton, global buyside head of GlobalLink FX product sales tells The Full FX.

The change impacted three GlobalLink platforms, FXConnect, Currenex and TradeNexus, all of which are available to clients through a single user interface dubbed GlobalLinkDigital, which enables interoperability within the GlobalLink ecosystem and complementary third-parties. Other upgrades, such as work on broadening algo availability automation and standardising data, reflect the high-level narratives in the currency space where more automation is irreversible while clients demand more data-related services and interoperability across systems than ever.

Other platforms are also undergoing similar processes. This is because the fragmentation of currency markets has only increased in recent years, despite many predicting consolidation trends. While there had been a wave of acquisitions, however, the number of places to trade and operate has overall increased, creating a headache for the buy-side as increased opportunities have brought with them additional operational complexity and a confusing amount of choice as well as huge quantities of data.

Not to mention regulatory imperatives.

J’aDORA, by ESMA

In recent months platforms have been grappling with an existential question: are they venues or just technology providers, in the sense that rules in the UK and the EU define the perimeters of a regulated trading arena?

Poulton notes that in some jurisdictions there is a lack of a level playing field due to some providers failing to complete registrations, which also impacts clients potentially. “I think that there are a lot of benefits to clients of trading on regulated platforms, investor protections work when they’re trading on those platforms,” she says, noting that regulated trading venues provide governance and surveillance, among others. “We run a regulated MTF where we provide services to clients. We’re very comfortable that we’re in compliance, and that our clients should feel comfortable trading across our platforms.”

But regulations don’t stop there. In January next year the Digital Operational Resilience Act (DORA) will kick into force piling further pressure on important infrastructure players. One expectation that’s part of DORA is for financial market actors to have formalised relationships with technology vendors and to have governance and oversight over the processes they supply.

While in FX, DORA has yet to make a big splash, some efforts, such as Citi’s annual vendor review, are already pushing the industry towards relationships that are more data driven and focused on measurable and quantitative factors. “My view of this is the industry is still in an exploration phase with DORA,” Poulton says, adding that while State Street has a large project around the new rules, GlobalLink is trying to anticipate what, if anything, clients might need in the future around this regulatory piece. ESMA will issue further guidance in September, which might push the issue further to the forefront.

Other regulations such as EMIR and T+1 remain drivers of activity, and were part of GlobalLink’s decision to integrate all three platforms for users, who can see all their trades and workflows in one place they can access with a single sign-on. Third-party applications are being considered as future additions. “Clients are able to view their trade lifecycle, their trade workflows, TCA and market data all in the same place,” Poulton says.

This integrated view, together with the work GlobalLink has done around standardising and enriching data, makes it easier for clients to fulfil their reporting obligations as well as to perform analytics which feed into execution decisions and duties around justifying trades.

More Algos, More Data, More Automation

Darren Smith, the head of FX Connect product says that one key area of ongoing work for FX Connect is making a broader spectrum of algos available to clients. Since the venue is already supporting more than 240 bank algos that users can choose from, this doesn’t sound like a massively urgent task. On the other hand, the changes are designed to reduce complexity of choice by upgrading its functionality to make the selection easier and less time consuming.

“One of the challenges we’re hearing a lot from our clients is that algos can be a little overwhelming. You know, there’s so many different strategies, they all have different names, they all have different parameters,” Smith says.

A key part of this is data, of which there is an abundance. Smith says that GlobalLink has gone through a big internal project to restructure data and to improve the accessibility and ease of processing by normalising formats across different banks and strategies. This year has also seen the roll-out of a data portal that sell-side participants can use to monitor reporting and understand positioning across the platforms. The company has also worked closely with State Street’s in-house TCA provider BestX to deliver value to clients by leveraging pre-trade analytics.

“We’ve been able to structure our data in a way that makes it very efficient to process large quantities of it so we’re able to provide clients with what they need to meet their regulatory requirements, which can get fairly complicated,” Poulton says. “So that in itself, provides a significant amount of value.”