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Harpal Sandhu co-founded Integral in 1993 with Viral Tolat. In the late 1990s Harpal foresaw the dramatic impact that e-commerce would have on wholesale capital markets. He began adapting Integral's strategy and core technologies — the risk management, analysis and capital markets trading... More
My company:
Integral Development Corporation
My blog:
FX Insider
  • From Stonehenge to the Asteroid belt or How FX Markets Have Changed

    FX markets have come a long way. In the late 1980s and 1990s, the market resembled Stonehenge in that a few silos dominated the landscape. They were, in fact, the market. It was a very static affair with high barriers of entry and almost no difference in what the few banks offered. Today’s market looks more like our solar system’s asteroid belt. There are thousands of market participants that come in all shapes and sizes. They are independent but connected entities. Barriers to entry are low. As a result, the entire market is in a state of flux which fosters innovation. Customers have many choices and competition is strong.

    The original banks are still around. I liken them to the planets; a small number of larger entities that still dominate the area around them but exert much less influence on the market at large.  In FX, like in other markets before it, a number of forces came together to affect this change.

    Technology innovation and regulation move markets ahead

    There are some great examples of how markets have developed, once regulation was introduced that leveled the playing field, or after innovation in technology changed the way business was done, or both.  Compare the US airline industry prior to the Airline Deregulation Act of 1978 and now. Think of the telecommunications industry before the Telecommunication Act of 1996 and now. In both cases, industry regulation has lowered the barrier of entry dramatically which in turn opened up the door for technology innovators to have a shot at a piece of the market. Both factors led to market expansion and changed who the dominant players were in both industries. 

    While it is still subject to debate to what extent regulation will ultimately affect FX, especially FX spot trading, I believe we are today at a crucial moment in time of our industry.  Regulation will have a direct and indirect effect. Direct regulation is still being written for the most part. Already, regulation is changing how banks and brokers do business in related areas that have an FX component; just think of their proprietary trading desks.

    At a recent industry conference, it was no surprise that regulation was a topic in almost every conversation. Participants were generally concerned. Aside from the fact that regulation of any industry is always also driven by a political agenda (which is a cause of concern), some areas will be more impacted than others. Participants seem to agree that significant changes to the regulation of FX options and possibly derivatives are to be expected.

    FX-in-the-cloud more valuable than ever

    It has been pointed out before that the Chinese word for crisis is composed of two characters that individually stand for ‘opportunity’ and ‘danger’.  While nobody really knows what the impact of regulation to FX markets will be, I definitely see opportunity. Integral, through its FX-in-the-cloud concept, offers every market participant the means to engage in new business opportunities with little upfront IT and capital investment. In these uncertain times, cloud computing is the perfect vehicle to test new business models. Or, just use this shared IT infrastructure as a hedgeto wait out what the business impact will be and defer any significant IT investments to when the fog has cleared. In the meantime, use our infrastructure to continue business as usual. (Needless to say ,I don’t expect anyone to switch back, once they experience the power of our platform first hand.) Either way, if your current FX platform doesn’t offer cloud computing, I encourage you to talk to us.




    Dec 01 8:50 PM | Link | Comment!
  • The New Meaning of ‘Mine’
    Sometimes I get the question how Integral’s products and services fit into all the different FX solutions offered to banks and brokers today.  Let me clarify and explain how what we do is unique, but also uniquely apt to augment the solutions of others.

    The largest FX network of its kind in the world…

    For starters, Integral helps FX market participants by organizing and automating their FX business.  We provide what we do as a service that is delivered in the cloud.  That means our customers never have to worry about issues that come with buying a software package such as addressing installation problems, building adapters, ensuring connectivity, etc.  We take care of all of that for them. We also offer access to an FX network that we believe is the largest network of its kind in terms of scope of reach. By connecting once to Integral, you gain access to basically every kind of business that is involved in foreign exchange. Integral’s FX Grid is the place to connect with all the different entities (i.e. liquidity providers, prime brokers, banks, brokers, hedge funds, corporates) and venues that comprise today’s FX markets. Once on FX Grid, you’ll find every potential business partner, from retail and institutional brokers, prime brokers, buy-side and sell-side banks, to algorithmic trading firms — on a global scale.

    … plays extremely well with others

    Integral is a neutral technology provider, not a broker or a bank. This simple statement already gets us a long way to being an acceptable partner for many. However, unlike other technology providers that offer a stand-alone software package or framework to enhance the business fortunes of one customer at the time; from the beginning, we designed our system with the concept in mind of providing a utility-like service that has the potential to serve the entire FX industry.  Every customer benefits from not only our expertise, but also from the network effect that comes from having created a virtual business community. Whether you’re looking to expand your customer base, add to your list of liquidity providers and prime brokers, or want to do what you do more efficiently, FX Grid delivers.

    The new meaning of mine

    Unlike systems set up by competitors, where participants are forced to adapt their unique business to the cookie cutter approach of their vendor, Integral’s approach is completely different. We believe that OTC market participants have unique business models which require custom configured deployments. By giving users the ability to differentiate themselves while also using a shared service environment empowers them with the best of both worlds: increased flexibility with reduced costs.

    Integral’s new advertising campaign

    You might have seen our new advertising campaign (Mine) in various trade publications and online.

    Mine is a term from the world of FX voice trading. The counterparty that’s saying it indicates that they are willing to buy at the conditions outlined to them.  I propose an extended definition of ‘mine’ to mean; the direct ownership of one’s FX trading and aggregations. It means that the bank or broker has the complete control over their world while still reaping the rewards of using a shared cloud infrastructure. That way, they benefit from all the advantages of this business model with the knowledge that it’s uniquely their liquidity, their customers, their algos, their brand and ultimately their profits.

    Integral puts you back in control of your FX business. Who is in control of your FX business?

    Tags: Integral, FX, Mine
    Oct 21 3:27 PM | Link | Comment!
  • Why Single-bank Systems Are Losing Ground

    As the operator of FX Grid, a global inter-institutional connectivity and trading network, linking market making banks to FX market participants, we are getting good visibility in how other systems are performing. During the hectic days in May that put strains on everybody’s systems, we know for instance who had outages. (Integral did fine by the way. Read more in our press release and in an earlier blog post.) Single-bank systems were among the ones that suffered the most severe outages. I see this as a clear indicator that their decline is ongoing, despite some marketing hype.

    Greenwich Associates already reported in April 2008 that “single-bank systems are failing to keep pace with the growth of multi-dealer platforms.” (E-Forex Comes of Age, Greenwich Associates, e-Forex Magazine, April 2008). In analyzing the results of its 2010 FX survey, Euromoney magazine made several observations that substantiate this claim. Euromoney writes: “The top three banks in the survey accounted for 40.44% of the total market in 2010, compared to 45.99% in 2009.”While Euromoney doesn’t say to where the market shifted, the fact that it continues to move away from the largest financial institutions suggests that single-bank systems are still losing market share. In my opinion, multi-dealer systems have clear advantages and the market seems to agree. Here are the four key arguments that proof my point.

    Point 1: Mind the dealer in dealer-sponsored systems

    Single-bank systems are also known as dealer-sponsored systems. If you are an active FX market participant looking for a partner to provide you with better technology and access to great liquidity, single-bank systems might be on your short list. My question to you is what is it worth to you? Is it worth providing a potential competitor with detailed information about your customers, your deal flows and yourself on a daily bases? It’s the modern times Trojan horse! Also, consider the switching costs and headaches if your requirements change, or if you become unhappy with the execution of the deal. How easy will it be for you to divorce yourself from something that is so entangled into your systems?

    Point 2: More is better when it comes to liquidity sources

    While single-bank systems started to offer some access to multiple liquidity sources, they just cannot match what multi-dealer platforms deliver in that respect. Our system offers access to 60 liquidity providers with over 170 streaming data feeds. As importantly, Integral is always looking for ways to increase that number and build out the network. We actively encourage what we consider positive network effects because it benefits all of our customers and entices them to trade more. As a neutral technology provider, increasing volume is our way to increase our revenue.  A single bank system is much more guarded in that respect since the operator of the platform is also a broker or a bank: As such, they compete directly with every other liquidity provider for market share.

    Point 3: Flexibility keeps everyone honest

    Competition is good for business. This axiom is true as well when you are selecting your business partners for a successful FX trading operation. Just by selecting a provider, you don’t want to surrender your right to choose. Since all of our solutions are provided On Demand, switching out liquidity providers, prime brokers or trust banks is extremely easy to do. I am not saying you need to do so in order to be successful but the fact that everybody involved knows you can, keeps them honest and forces them to provide you with the best offer they can afford, day in and day out.

    Point 4: No judgment, pure facilitation

    Integral automates the FX business you already have in place. We don’t force changes upon you so you fit into an existing mold as many single-bank systems do when forcing you to fit into their existing platform. We offer a utility-like superstructure, for you to use the way you deem best. Whatever works for you, we help you automate it and make it more profitable.  If you think you’re getting the same from a single-bank system, I encourage you to inquire about the layers of filters they put in place before giving you access to their market.

    The best of both worlds

    Let’s say you are really happy with the liquidity stream from your single-bank system provider but want to increase your flexibility. I encourage you to get in touch with us to explore your options. Chances are your single-bank system is also a liquidity provider to our network. You will be able to continue trading on that feed.  It just won’t be your only leg to stand on anymore in an emergency.

    Oct 18 5:22 PM | Link | Comment!
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