Integral reported average daily volume (ADV) of $36.41 billion between April 2018 and the end of the year, although this figure includes all FX products, not just spot. Because last year was the first time that Integral publicly started reporting monthly volumes it’s impossible to benchmark the firm’s performance along this metric, but in any case the firm’s CEO, Harpal Sandhu, explains that these volumes are really indicative of client performance rather than the platforms.
“Integral is much more heavily weighted towards being a technology provider for our customers, as opposed to being just a pure platform or ECN,” he says. “So when we talk about volumes, that’s really a reflection of our customers capturing share in the direct competitive worlds that they operate in – whether that’s Wells Fargo competing in the US domestic corporate market or Mizuho competing in Japan or an FX brokerage firm competing in Eastern or Southern Europe. They’re all competing in their own markets, we just provide the underlying technology.”
On the technology side, Integral upgraded all aspects of the technology stack for its OCX platform last year, from the networking infrastructure to the software and hardware. It also launched in data centres in London and Tokyo, in addition to its existing one in New York.
In 2018 Integral also changed the pricing structures for both its ECN and technology services. Pricing on the OCX platform was standardised at $2.75 per million for anonymous trading, while clients using the firm’s technology services are now charged a fixed price based on a monthly subscription basis.
Discussing the latter, Sandhu says: “It’s just like Netflix: if you buy it and you use it more than expected then you’re the beneficiary, period. And if you like it then you might as well use it more as it won’t cost you anything extra to do so. Whether it’s the pricing engine or the risk management, it’s the clients’ decision on what products they want to use and how long they want to subscribe to the service for, although there is a discount available for firms willing to sign up for a longer term subscription.”
The other big roll out at Integral last year was its data science platform, which Sandhu says the firm has spent the past five years developing in order to capture every single event that happens on its platform and present this data in a way that enables customers to fine tune their FX trading.
“We rolled out a series of products that enabled market participants to see exactly the quality of services that they’re getting from counterparties in the market and from the Integral system: they can see latency, they can see real-time spread analysis, they can see the value of flow, the value that liquidity providers are giving them, they can see everything. Liquidity providers can too: they can see how much the market moves every time they trade with a certain person, they can see if someone’s flow is informed flow or natural flow, they can look at the data to determine what is in fact good flow or not,” explains Sandhu.
This data science platform is all Web-based, it runs in Integral’s cloud infrastructure and can be viewed in real-time on the desktop.
“It requires a lot of analytical strength and prowess to develop something like this, that’s why we spent five years building it. The top five banks probably have reasonably good data science tools internally, but they probably spent anywhere from $50 million to $100 million building those tools. It doesn’t make economic sense for anyone outside these top five to invest that much money in these analytics so they look to technology providers to offer them instead. The only reason why we’re able to offer this is because we can absorb the cost of building it by selling it to so many customers simultaneously. But it’s great for the users because it lets them operate like a tier one bank and re-use a few hundred million dollars worth of IT infrastructure for very small amounts of money,” says Sandhu.
In November last year, Integral attracted a $15 million investment from Morgan Stanley Capital. When questioned on how the firm plans to invest this injection of capital, Sandhu says that one of the key themes for 2019 will be in educating the wider market of the benefits of its subscription-based technology offering.
“One side of that is educating our existing customers on all the different aspects of their FX business that they can automate, all the ways that they can enhance their risk management and how they can use data science to improve their trading. Essentially, engaging customers to help them grow their businesses faster,” he says.