Kirsty Gillies, global head of e-FX sales at Sucden Financial, talks to Profit & Loss about how the firm is expanding in different geographies, the impact of fintechs on the e-FX industry and the importance of diversity in the workplace.
Profit & Loss: Sucden Financial has been expanding its presence in Hong Kong lately, is this predominantly a play for more Chinese business?
Kirsty Gillies: We definitely see opportunity in China, but more broadly we consider the APAC region to be an area of high growth potential for our e-FX team.
We first established our Hong Kong office in 2008, so we already had plenty of knowledge and understanding of the local markets, but over the past 18 months we’ve built up our presence there with some strategic and key hires, most notably Phil Kim, who heads up the e-FX sales team there. We have also added individuals who bring Mandarin and Cantonese language skills to the desk.
Historically, our e-FX presence in APAC was primarily within the margin FX space, but we’ve made a real strategic decision to also target the institutional space – and that’s actually a global push.
One thing that I’m particularly excited about is that we’re in the final stages of releasing our TY3 matching engine, which will launch in Q1, and we’re adding NDFs to our electronic product suite. All of this is going to allow us to target and service that local APAC client base much more effectively.
P&L: Switching geographies slightly, Russia is another market that Sucden is very active in, are there plans to further ramp up the business there?
KG: Right now we are connected out of our LD4 servers to the physical servers of BierbaumPro – which is branded as NTPro within Russia – and to the point of presence for Aggregator FX. These are two widely used electronic platforms in Russia.
But starting early this year, we’re going to be integrating directly into BierbaumPro, meaning that we’ll be able to stream to their client base in LD4, as well as having a dedicated high-speed connection to clients or servers in Moscow. Off the back of that development, we can use that high capacity line to stream Aggregator FX clients and their servers in Moscow. Clearly, this is something that only has a positive impact with regards to latency and it also helps the local Russian clients.
P&L: In terms of product set, where do you see the opportunities for a firm like Sucden, especially given how commoditised G10 spot has become?
KG: I agree that G10 spot has become highly commoditised, and clearly that was exacerbated by market conditions in 2019. So while we’ve always been a full service e-FX and precious metals provider – supporting spot, forward products, swaps, options and deliverable FX – we are now adding NDFs to our product suite.
I think that we’re well–positioned against this backdrop of a commoditised G10 spot space, and we’re also very fortunate with the strategic regional bank partnerships that we have in place. So whilst we are, as are many others, strong in G5 currencies, we’ve also got a strong track record in the more peripheral pairs – the likes of MXN, ZAR, TRY, the Scandi and Central European currencies. In addition, Sucden Financial’s background in commodities means that we’ve always been very strong in precious metals and gold is one of our highest traded currency pairs by volume.
P&L: Another thing that seems to be increasingly commoditised is execution analytics. With so many banks, platforms and independent third-party firms now providing some form of transaction cost analysis (TCA), how do you differentiate between the various offerings?
KG: Data is certainly a hot topic right now, but the real question is: how do you monetise it? From our perspective, data is really only valuable if we can answer questions from it and derive actions from it.
That’s why we selected FairXchange to partner with for data analytics. They have created a very functional user interface which allows us to really easily and quickly access the relevant information, cut and dice it as we need to and also to share it anonymously. Their market data is from a neutral source, so the results are free from inconsistencies or any elements of bias, which is particularly important when you’re looking at EM currencies. Also, they are independent, which is one of the most important criteria for us when selecting this type of partner.
P&L: Have there been tangible results from using these analytics?
KG: Absolutely, yes. What the FairXchange platform does is allow us to monitor our liquidity providers alongside the client trading analytics to effectively optimise performance and tailor the trading environment for all parties involved. Importantly, it allows us to have very productive and informed conversations which we can then back up with data and visualisation tools, which as I’ve previously mentioned are provided anonymously.
One example of how the FairXchange tool has helped us is in APAC where some of our clients are particularly latency sensitive. In the past we weren’t necessarily able to pinpoint the root of an issue with complete certainty, but with the FairXchange platform, such issues surface very easily. So far we’ve had extremely positive feedback on this from both sides, the liquidity providers and the clients.
P&L: Given your partnership with FairXchange that you mentioned, do you see fintechs having a real and significant impact on the FX industry?
KG: Yes I do, and their impact is growing. From my personal experience I can tell you that fintechs are really challenging the bulge bracket investment banks in their own specialist areas, making many different aspects of FX operations available at lower costs. This is only going to continue driving overall transaction and service costs lower.
From our side, when we’re choosing a fintech firm to partner with – and in particular a startup – there has to be a significant amount of due diligence done, but purchasing a product or a service from a start–up can be very transformative. We actually have a good track record of partnering early with start–up firms, which is not something that I think many other non-bank liquidity providers could say.
P&L: How material is the challenge to big banks from fintechs?
KG: Ultimately, a fintech firm is going to struggle to challenge an investment bank because of the scale and breadth of the bank’s offering and the clients that it has. But I think that with a targeted approach, they can be very successful in their specialist areas and I think that this healthy competition can help drive innovation across the industry.
One thing I have noticed though is that the banks are losing a lot of good people to start–ups. Some of these people have great ideas and I think they don’t want to be constrained within the bank framework as they build on them.
P&L: Speaking of which, your entire career was spent on the banking side prior to your move to Sucden just over a year ago. Why did you decide to make this change?
KG: Yes, so I spent 12 years working in banks prior to joining Sucden Financial. The fact is that the e-FX management team here was well known to me already from my time on the bank side and as a result, I already shared their vision for the future development of the business. I would also say that a big theme that I’d been seeing was the desire of larger institutional clients to get improved price discovery via non-bank liquidity providers, and I think that Sucden Financial is perfectly positioned to meet that need.
Personally, I have particularly enjoyed the entrepreneurial atmosphere at Sucden Financial and the ability to truly shape our offering to meet my clients’ requirements, something that is very hard for any salesperson to do in a meaningful way at any investment bank.
P&L: In your prior role at UBS, you were on the diversity and inclusion committee. How important do you think diversity is for firms involved in the FX market?
I think that diversity is absolutely crucial in any workplace, but particularly in sales – having a diverse team makes us better placed to connect with clients. I would say that I’ve certainly seen improvement in the e-FX industry as a whole over the past decade, but I was disappointed to see that a recent FCA published research article on gender diversity in UK financial services noted particularly low levels of diversity within institutional brokerages.
However, I would add that I’m pleased to say that the team here at Sucden Financial is bucking this trend.
P&L: Is this an issue that demographics might help solve as, over time, the next generation comes through the ranks? Or are there structural factors that need to change?
KC: I’ve seen research which shows that banks take in roughly as many women as men at the graduate level, but that later on the challenges of retaining senior female talent mean that the figures become much less balanced. Clearly one way to counteract this is to offer more flexibility to staff to help them balance other commitments. The industry is making improvements on this front, but a lot more needs to be done.
The topic of quotas always gets raised, but I’m a firm believer that quotas in any industry at the hiring level are a bad, and to be honest rather crude, way to promote diversity. I would love to see quotas introduced at the interview level instead so that the many brilliant women who are out there are given the opportunity to show what they can do. From that point on I think it’s a case of ‘may the best man or woman win’, but I think that you have to get more women in front of the people who are making the senior hiring decisions within financial institutions.