As higher profile portals look forward to developing additional product capabilities, Germany-based 360T has stolen a march by releasing a cross product platform that enables its users to trade FX spot, forward and outrights (including broken dates and mis-matches), money market loans and deposits, FRAs, interest rate swaps out to 10 years, and vanilla FX options.
360T can currently be termed a niche platform; however, the niche it is carving out for itself involves trading with many of the largest corporations in the global market. Having been designed with the conceptual assistance of Lufthansa, the German national airline, it is no surprise that the platform provides most of the needs of the corporate world. But as Christoph Perger, head of marketing at 360T, notes, “The system’s technology also provides many of the needs of other segments of the market. The corporate world likes it in particular however, because it is a toolcase of different instruments rather than just an FX machine.”
Perger explains that 360T was initially planned around the same time that Currenex was looking into building a system. After consulting with local multinational corporations in Germany, it was decided that what was needed was a multi-product platform, accessible through one interface that would look identical no matter what the product being traded.
“This is why it took us longer to go live,” explains Perger, “We wanted to develop a completely open model that could support any kind of financial instrument. It is a complicated product from a technological perspective, but now that it is up and running – on Java technology so it runs quicker – our clients find they can trade instruments on our platform they cannot on others.
“Clients want to trade money markets as well as FX and interest rate derivatives online for example, which they can on 360T,” he continues. “Elsewhere they may have to wait for the functionality to be developed. This is one of our biggest differentiators, and our customers appreciate our general capabilities.”
Perger also stresses that 360T does not intend to stop here with its range of products. “We are currently developing the functionality to enable clients to trade commercial paper on the system,” he says, “Consideration is also being given to trading certain commodities over the platform. We are a technology provider, not just a platform operator, developing the technology to trade these products is our core competency.”
Certainly 360T offers a spread of markets that no other multibank service does at this time, or is likely to in the near future. What strikes the user initially about the system is that every screen mask looks identical whether the user is trading 10-year swaps, EUR/USD put options, or spot FX. In all markets the system has multiple request for quote (RFQ) functionality to a configurable group of banks which can be placed into default groups according to product traded.
All products have constantly updated indicative pricing available, except for the FX options model. The company says it is currently negotiating to provide an accurate price feed to ensure the product’s overall standards are not compromised. When wishing to trade, the user merely clicks on the side of a price it wishes to deal upon, as well as a deal ticket, needing only the provision of a notional amount. All products are supported in 22 currencies, except for some of the more illiquid emerging market currencies where medium term swap prices are more difficult to price.
Within the FX model, users are offered a choice of pricing models: standard RFQ, limit order, one or two way prices or reverse auction. When banks are quoting in competition, they can see the other quotes, an equivalent process to an open order book on an exchange trading environment. If more than five quotes are requested, only the five best are shown.
When trading interest rate swaps, the ticket mask produced when a price is clicked upon is identical to other products and is fully configurable by the user, including both dates, quarterly, semi or annualised fixings, which can be floating or fixed. In effect it replicates the decision- making process of a trader dealing over any other medium.
It is a similar story with the FRA, cap/floor and option products. The latter supports European and US style vanilla puts and calls. Perger says that 360T’s target is to cover 90% of the transactional product needs of the corporate treasurer, as well as provide a wide-ranging service to other segments. This is one of the reasons why a move into the more exotic options market is not currently being considered. “The technology architecture means it can be done, but is there the demand?” asks Perger. “The likelihood is that there is more interest in the commodity and bond markets for example. We will maintain a continuous dialogue with our clients however, and will add products and functionality according to their needs.”
Perger believes that 360T’s strong foundations are a result of the company’s size when it commenced business. He says, “When we started business, being a smaller company with a cost structure that was manageable meant we could run an efficient business model with our increasing number of customers and their relevant banking relationships.”
This foundation means the company can, when it wishes, push into other geographical areas. “We believe in the efficiency gains of the technology and our business model,” says Perger, “And as we are providing the technology for multinational corporations, we can if we choose, extend our offering globally.”
“We will not shy away if we are asked by a client to come out of our niche,” he continues, “But there are some realistic equilibriums when it comes to the size and scope of our models. We deliberately chose to be a niche offering from the start, to ensure our business model was right. The fact that volumes are increasing on the system indicates we were right. We are now looking to see how large the concentric circles get from the stone we have thrown in the water, bearing in mind at all times that we must grow at a pace that suits our structure if we are to retain the same quality of services we currently provide.”
Initially the company is focusing upon Europe and Scandinavia, however thoughts are starting to turn to distant fields. “Our strategy now is to continue to build volume quickly with our existing customer base,” says Perger. “Our interest and geographic spread is likely to extend through our target clients, which include multinational corporations with operations in Europe, but who are not necessarily headquartered there.”
The temptation for the outsider is to refer to 360T as a ‘boutique portal’, primarily because it is currently such a niche offering. Ultimately however, the company has what Perger terms, “some heavyweight clients”, and this means it cannot be ignored by other, more visible portals. 360T provides STP capabilities and, as a vertically integrated platform, it remains relatively unique. The company says one of its strengths is in its relationship with the top tier of the corporate market, and knows it has a role to play in what many see as an inevitable contraction of the portal market. “At the end of the day,” says Perger, “We are happy with our offering, and more importantly so are our customers. Maybe there are too many portals in the market at the moment, but we are confident that our multi-product offering, key relationships, and strong ties to our clients, are a real advantage in the current environment.