The Full FX Conversation – with BidFX
Posted by Colin Lambert. Last updated: October 20, 2022
Singapore Exchange has made quite a splash in OTC FX circles in recent years with the acquisition of first BidFX and more recently, MaxxTrader. It has also launched CurrencyNode, an FX ECN. Colin Lambert talks to John McGrath, chief revenue officer at BidFX, about how the businesses fit together, and plans for 2023
Colin Lambert: Earlier this year SGX completed the purchase of MaxxTrader, how is that business being integrated and how will it fit within the overall FX business?
BidFX, CurrencyNode (the recently launched FX ECN) and now Maxx Trader are part of the SGX vision to establish the leading integrated FX market across OTC and futures FX. It is a natural fit within the FX business group as with its sell side-facing technology, it sits seamlessly alongside the BidFX buy side service and the ECN.
The acquisition of MaxxTrader creates some real synergies and opportunities to utilise its market leading technology with some of BidFXs cutting edge clients and vice versa. Integration from a technical perspective should be light due to the fit within the SGX FX product group and the complimentary technology.
Branding will also be adjusted over time to ensure the market understands the offering available. This business will be serviced by people who lead the field in their knowledge and understanding of the FX market.
From a client perspective, is the aim to provide a modular, but full-service solution? For example, does MaxxTrader target different clients to BidFX?
Yes, MaxxTrader and BidFX both target different clients, which was part of the strategy behind the acquisition. It allows the business to work seamlessly together to provide clients with the product modules they most require. For example, a hedge fund or asset manager might need access to the leading aggregation service with order shaping and netting, automation and algo’s. A bank, however, may require a pricing engine and price distribution service with cutting edge technology around flow management and client management.
Of course, the real value comes to those clients who cross over, for example a large pension fund with an internal pricing/execution desk for portfolio managers, or a large corporate who needs a leading aggregator combined with a trading engine for internal subsidiaries.
How has the business progressed over the last year or 18 months, especially given the rise in FX volatility?
BidFX has had an excellent year both in client acquisitions, volume and product delivered to the market. The biggest project of 2022 was the successful migration of all our clients to our brand new HTML5 platform which we call BidFX Central. This was the largest project since our inception in 2017 and the smoothness of the migration was a testament to the technology developed and the teams who dedicated their time to making this transition go so smoothly. We really pride ourselves on our technical stability and customer service, especially in these volatile markets, and we will continue to make this of paramount importance going forward.
This project was a four-month transition but within this period we have continued to grow our client base and ADV. Volatile markets of course help fuel ADV growth short term, but we look for constant innovation and client acquisition across client types to help fuel a smooth upward trend. So far, this approach has worked well and we continue to expand both from a client perspective and a regional perspective.
At present BidFX alone regularly goes through $100 billion ADV a day which shows how quickly we have established ourselves as a major player in the market and the continued client acquisitions based on the back of our leading technology gives us plenty of scope to make that a starting point for growing market share globally.
Impressive numbers, so what have been the key growth areas in both product and geographical terms?
This is a good question as it encapsulates two of our key themes of growth. BidFX has always striven to ensure we are ‘local’ to clients with a presence in London, Singapore, New York, Geneva, Milan, Hong Kong, Tokyo, Sydney and this month we were happy to announce local Nordics coverage out of Helsinki.
You can’t expand geographically without product growth, however, as this drives your success and ability to deliver client solutions that gives clients success stories.
BidFX Central allows us to deliver better performance and quicker development lead times for all of our products and was another reason behind the migration to this product. At the same time, we have continued adoption of BidFX in the buy side community with work on the user interface/user experience, expanded our mobile product to include more deal types (now spot, forward, swaps, NDF and NDS) and continue to invest in our data product, about which you will see much more at the end of this year as we make some exciting announcements.
The quickest growth area by client type in 2022, however, was the asset management community and we plan to continue build out on some exciting new to market features in 2023 around how to handle netting, roll forwards and deal with fixings.
This community has traditionally found it very hard to react to new technology due to the complexity of decision making within these global firms, but we now see a real shift in this market as anyone who is representing investors knows the benefits of dealing with technology and liquidity that can give a better execution experience to the buyside. It is becoming increasingly important that buy side participants spend time conducting in-depth analysis of the recent innovations and vendors in the market.
So looking forward, what are the key themes for the businesses likely to be as we approach 2023?
In 2023 we really want to try and provide some thought leadership to the buy side both in workflow and execution. We are number one in certain markets, for example, NDF’s, or with certain client types such as hedge funds, and it is all about ensuring that the buy side across all products and client types see some of the cost savings and optimisation they can achieve by using BidFX.
There is nothing more frustrating than a leading buy side firm telling you that, for example, NDF’s are of major importance, and then hearing they decided to stick on a legacy platform who don’t even having streaming liquidity in NDF’s. To hear decisions are still being made like this in 2022 is surprising but thankfully becoming less common.
We are looking to ensure that the agenda and thought leadership we can provide acts as a catalyst to a customer success story. Nothing works better for us than a successful customer who is receiving good customer service and seeing an alpha component in using BidFX. We will continue to market the multi-dimensional coverage of SGX FX across BidFX, MaxxTrade, CurrencyNode and futures, as well as looking to inspire the market with new products and utilise our client feedback to ensure the product is continually innovating and relevant.