The ever-changing trading trends | Steven Calascione

Could you briefly discuss your background, insofar as it brought you into the foreign exchange market? What were the circumstances under which you and our partner founded FX Capital Malta?
"FX Capital Group (Malta) is a joint venture between London-based FX Capital Securities and the M. Demajo Group, both being household names in their respective areas. FX Capital Group (a trading name of FX Capital Securities) was founded in 2008 and immediately attracted seed funding by London-based venture capital Anthemis Group and the City of London Group plc - a major investment firm listed on the London Stock Exchange. In November 2011, we received a further four million dollars in 'Series A' funding from Atlas Venture - a large US venture capital firm.
"On 1 January 2012, the very experienced Mike Laven took over the helm. Mike has the leadership skills and global outlook needed in this line of business.
"Our local venture was formed in 2011 after I met up with FX Capital Founder and Executive Chairman Nigel Verdon, an old school friend from my boarding school days. My own background is in global sales and more recently, technology research in the global market context."

And what other services does your firm offer? What strategies are being used to deliver trust and transparency to the Forex market through your web trading platform?
"We are unique in that we have developed two core competences not normally seen together, namely we are specialists in technology particularly as it is applied in the financial services space. We are also a licensed MSB (money services business) specialising in foreign exchange delivery and international payments.
"It is important to differentiate foreign exchange delivery from speculation. We are not an investment services company. Our technology allows companies to develop better execution strategies in their foreign exchange dealings. Needless to say, they are also given direct and live access to foreign exchange markets and when they do execute a trade, we provide them with a digital record of that transaction, leading to full transparency and auditability.
"Because we are a technology company, we are flexible. In theory, we can integrate our proprietary APIs and infrastructure (our core technology) to any platform. This leads to savings in payroll (process driven) and transaction costs. In the current environment, our proprietary technology gives our clients the leading edge they need to stay ahead of the game and focus on their core business, instead of for instance, chasing service providers for the "best price". This is hugely a time-consuming exercise and a "hidden cost" that is impinges on a company's ability to remain focused and competitive."

Can you tell me more about your currency brokerage FX2.0 technology system?
"Under The Currency Cloud^TM (TCC) brand, we offer a fully scalable infrastructure to payment firms. By engaging with us, clients can avoid the extremely lengthy and expensive process of developing their own in-house offering. With TCC the client is assured of extremely rapid 'go live' timeframes, and more intuitive and manageable processes that drive customer acquisition and growth.
"Ultimately, this translates into better margins across all transaction channels including by phone. TCC provides a unique solution for any firm seeking to grow their international payments business. We enable firms to quickly and easily enhance their client offering with a functionally rich online payments application.
"Our TCC client application is an "out of the box" online solution that is easily customised with the client's brand identity and logo. The client retains ownership of the client relationship and we provide the technology. Clients access the web-based platform to perform their transactions based on the client's terms of service."

How does your firm's newly set-up system differ from other brokerage companies and banks offering more or less the same services? What makes traders choose you as their Forex broker? I mean the main features they look for when they select you among others?
"We offer full transparency and consistency. We are able to do so because we have developed cutting-edge cloud-based technology that is automated and customised to client needs. This gives us the edge. We understand what is happening in the technology universe and also the specific needs of our clients in foreign exchange."
 
What do you think have been the biggest changes and challenges both in terms of the industry makeup and the way in which traders interface with the market?
"Undoubtedly, technology has been the biggest driver of the foreign exchange and financial services sector in the last decade. To illustrate this point, a PricewaterhouseCoopers report is predicting that the global payments sector will grow at an average CAGR of 70% between 2010 and 2015, to $250 billion. The banks are well aware of this trend and are investing heavily in this sector. This is expected to fundamentally change the way people transact."

Can you comment on how traders are changing? Are there perhaps some tools/strategies which are fading, and some which are rising to replace them? Has Forex online taken over the traditional trading methods?
"I read a report that in Germany, 64% of foreign exchange was conducted online in 2010. This shift in trading behavior has occurred at the expense of the traditional method of trading, which was over the phone.
"Online is more convenient, and you have round the clock access to the markets, instead of just during working hours which frequently means a cut-off time of three o'clock. If technology can enable seamless trading, why should our clients have to wait for the banks to open to book a trade, if the markets are open 24 hours a day during the week?"

How is FX Capital positioning itself to stay ahead? Will you be updating infrastructure?
"Because we are a 'fin-tech' company (a technology company operating in the financial services space) our technology is updated continuously. In fact our clients will be benefitting from a major new release next  month."

Is your clientele based mostly on foreign or local? And how many members does or website currently have? Will you be expanding into new markets?
"Our clientele are based all over the world. Because our client application is web based, it is very scalable."

What role will e-currencies play in this future?
"A newspaper article I read today spoke of the possibility of using cash for online purchases. Will we start seeing apps built into bank notes?
"Of course this was tongue-in-cheek, but I believe it says much about the practicality of paper money in the global economy."