Articles tagged by Fintech
Digital Asset, a developer
of distributed ledger technology, has hired Carol Mathis as its chief financial officer (CFO).
Mathis joins from RBS
Corporate and Institutional Bank, where she was a managing director and chief
operating officer for the past three ...
Franck Mikulecz, managing director of the newly established clearing house FXCH, explains why
and how his firm is using distributed ledger technology to clear spot FX
Profit & Loss: You’ve launched a clearing house to clear spot FX using ...
Along with “Blockchain” the most ubiquitous phrase in financial markets this year has been “FinTech”, which of course encompasses blockchain technology.
Venture capital (VC) money continues to pour into the space, innovation labs and accelerator programmes are sprouting up in banks across the globe and many established technology vendors within the financial services industry appear keen to adopt the FinTech label.
But is the FinTech that we’re seeing come to market now really anything new? Or is it just the continuation of an old trend that’s been given a more exciting and investor-friendly label?
FinTech, and in particular blockchain technology, is set to significantly change how banks operate, according to John Tsang, financial secretary for the Government of Hong Kong SAR.
However, speaking at a Fintech briefing in New York today, he warned that some banks are ill-prepared for the changes that will be driven by this new technology.
“Most of the bankers that I know are the people that are least prepared to deal with FinTech, they have no idea what blockchain is and blockchain is going to change their lives. They might not have a job, to put it in a more brutal way,” he said.
David Mercer, CEO of LMAX Exchange, talks to Galen Stops, deputy editor of Profit & Loss, about why FinTechs are enablers rather than disruptors of the FX market.
The world “disruption” is often applied to FinTech firms, yet Mercer argues that in FX the role of these firms is not to disrupt but to enable the growth of the market.
“We’re trying to enable the industry to operate more efficiently and more fairly. Other people put that disruption word around companies like LMAX Exchange but the FX market is the biggest asset class in the world, it doesn’t really need disrupting, it needs to grow and it needs to be enabled to allow it to grow.
After two years of endless hype, Galen Stops looks at whether 2017 will be the year that distributed ledger technology broadly starts getting put into production within mainstream financial services.
Last year saw numerous firms producing proof-of-concepts (POC) regarding the potential application of distributed ledger technology (DLT), issuing whitepapers about the technology and hosting “hackathons” and other events to discuss and promote its use within financial services.
Profit & Loss covered the major developments around DLT last year, but the editorial team started expressing frustration towards the end of the year regarding the disparity between the PR and subsequent press coverage surrounding DLT and the actual amount of tangible projects being put into production using this technology.
Although I have never really bought the argument, there does seem to be a consensus in the FX industry that fragmentation has been a good thing. There appears to be another consensus building in the industry that it needs a complete technology reboot - in the most extreme circumstances people call for an entire rebuild, a more modest plan calls for focus on specific areas. If both arguments are correct, proponents will probably not be happy to hear me call for less fragmentation in any reboot.
Catherine Flax has left her role as managing director, head of commodities, FX and local markets, Americas, at BNP Paribas.
Although an official spokesperson for the French bank declines to comment on the news, Profit & Loss understands that Flax has indeed left BNP Paribas and will be working as an advisor to FinTech firms focusing on artificial intelligence in financial services. She remains based in New York.
Prior to joining BNP Paribas in 2013, Flax spent eight years at JP Morgan. During her time at JP Morgan she worked in a variety of roles in London and New York, before being named as chief marketing officer at the bank in 2012.
The US Commodity Futures Trading Commission (CFTC) has launched LabCFTC, a new initiative aimed at promoting responsible FinTech innovation to improve the quality, resiliency, and competitiveness of the markets the CFTC oversees.
Located in New York, LabCFTC will also look to accelerate CFTC engagement with FinTech and RegTech solutions that may enable the CFTC to carry out its mission responsibilities more effectively and efficiently. The initiative was approved by a unanimous vote of the Commission.
“Simply put, LabCFTC is intended to help us bridge the gap from where we are today to where we need to be: 21st century regulation for today’s digital markets,” says CFTC Acting Chairman Christopher Giancarlo.
Next week, more than 200 FX professionals will gather at Forex Network New York to hear industry leaders debate the most pressing issues in the market today.
May 25 marks the release of the Global Code for the FX industry – a global set of principles guiding good market practice – which has been developed by The Bank for International Settlements’ )BIS) FX Working Group, which consists of market participants as well as central banks from 16 jurisdictions.
James Bergin, SVP and deputy general counsel at the Federal Reserve Bank of New York, will introduce a panel that will discuss the issues of note within the Global Code.
Speaking at the Profit & Loss Forex Network New York conference, panellists outlined how they think the application of fintech solutions will shape the FX industry going forward.
Nick Solinger, president of FIA Tech, broke down three specific areas where he sees the potential for distributed ledger technology (DLT), or peer-to-peer technologies, to have a major impact on the FX industry.
Firstly, he highlighted how these technologies could change payments systems.
“The current market structure has been the primary limitation in terms of who can provide credit to whom and trade with whom and access the market on the same basis as a large, highly regulated dealer. So there is a focus on improving the payment network, and that will have potential implications upstream in terms of who can trade with whom,” said Solinger.
Rosario Ingargiola, founder and CEO of OTCXN, argues that accessing wholesale liquidity is one of the biggest challenges in the FX market today that could be alleviated by fintech solutions.
Speaking about different approaches to the FX market by fintech firms, Ingargiola says that one strategy is to look at areas where new technologies can reduce costs in terms of how firms operate and another – which he says OTCXN is pursuing – is to use technology to change the way that firms operate altogether.
The area where he sees the biggest opportunity to change the way that firms operate using fintech solutions is around using credit to access the FX market.
Fintechs from Silicon Valley are being hampered by their lack of understanding about how the incumbent financial services firms in the market operate, according to Rosario Ingargiola, founder and CEO of OTCXN.
Discussing the biggest barriers to adoption for fintech solutions, Ingargiola explains that the primary concern is usually related to how these solutions comply with the existing regulations in the market.
Specifically, he says that financial services firms want to ensure that the necessary Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements are in place before they’ll even begin taking an in-depth look at the solutions being offered by fintech firms.
Christopher Giancarlo, the acting chairman of the US Commodity Futures Trading Commission (CFTC), has appointed Daniel Gorfine to serve as director of LabCFTC and chief innovation officer, effective immediately.
“Daniel is a well-respected leader whose expertise in market-enhancing fintech will help the CFTC disrupt the status quo and change the way government interacts with our ever-innovating marketplace," says Giancarlo. "Daniel's addition to the team will move our LabCFTC initiative into its next phase and will further our efforts to make the CFTC a 21st century regulator for our 21st century digital markets."
LabCFTC is a new initiative announced by the Commission in May, which aims at promoting responsible fintech innovation to improve the quality, resiliency and competitiveness of the markets the CFTC oversees.
BiBox is partnering with Santander Global Corporate Banking to focus on fast-paced integration of fintech solutions into the bank.
The collaboration will enable Santander to quickly integrate new solutions and technologies across all business units faster than traditional onboarding methods via its digital marketplace. The aim of this is to produce cost-savings, faster speed to market, greater standardisation and data sharing in a compatible and compliant manner.
BiBox has been working with Santander Global Corporate Banking to deploy its ‘curation and industrialisation’ offering, which enables smaller players such as fintechs to provide their tools within end-to-end workflows that banks can consume more readily within the confines of scale and regulation.
OTC Exchange Network (OTCXN) has announced that DV Trading has joined its early adopter Program as a liquidity provider.
DV Trading will support Foreign Exchange liquidity provision in relevant currency pairs on OTCXN’s network. OTCXN’s Peer-to-Peer trading network and total trade-to-settlement solution aims to deliver a hybrid market model that combines high-performance, real-time trading technologies and enterprise blockchain technologies to solve market credit gaps, lower risk, and increase eligible counterparties.
“Innovation is core to our business, and we strongly support OTC Exchange Network in its mission to democratise financial markets while leveraging Blockchain technology to reduce credit and settlement issues. The global foreign exchange market is a natural place to start, but we expect OTCXN to adapt its technology solutions to support additional asset classes in the near future,” says Jared Vegosen, co-founder of DV Trading.
For the past few years the financial services industry has been abuzz discussing how new fintech solutions are going to change the way that the industry operates.
Venture capital (VC) firms have been throwing money at fintechs, banks have been launching incubator programmes and innovation labs, and existing technology vendors have been re-branding themselves all to try and take advantage of the fintech hype.
As such, it’s nearly impossible to have a conversation about the impact of fintech without someone talking about the potential for “disruption” within financial services. And yet, certainly within FX specifically, it remains hard to really identify any tangible evidence of this disruption thus far.
It seems that regulators are unlikely to place any significant burdens on new fintech firms emerging in the wholesale financial markets in the near future, given their lack of familiarity with the technologies involved.
Speaking on a recent webinar hosted by Profit & Loss, Justin Slaughter, a partner at Mercury Strategies, explained that, when it comes to fintech, regulators in the US are still very much in “information gathering mode”.
“Much of what regulators are doing right now is simply trying to educate themselves. There is a significant lack of understanding about how fintech is so much broader than, say, just cryptocurrencies or even DLT [distributed ledger technology],” he said.
Although fintech solutions are likely to change how FX operates throughout the trade lifecycle, expect these changes to be evolutionary rather than revolutionary, explained speakers during a recent Profit & Loss webinar.
The word “disruption” has become synonymous with fintech in recent years, with numerous articles, whitepapers and analyst reports warning that fintech upstarts are looking to upset the applecart in financial services.
Yet speakers on a recent Profit & Loss webinar, FinTech in FX: Getting Beyond the Hype, which was sponsored by IHS Markit, preferred to talk in terms of innovation rather than disruption when discussing the impact of fintech in the FX markets.
It seems that increasingly, some FX firms want to adopt the business models deployed so successfully by the large technology giants that have emerged from Silicon Valley.
Banks talk about developing their single-dealer platforms to mimic the Amazon model of being able to supply everything that their customer needs within one platform.
At least one trading venue is talking about moving to the Facebook model of charging nothing for the actual technology platform that it provides, because it will instead derive profits from the data generated by that platform.
Colin Lambert believes data will become a commodity and will generate a divide between the "haves" and the "have nots".
There is little doubt that data drives most things in foreign exchange. Pricing is the obvious area, but client business is now also analysed to great depth as service providers seek to more clearly define the value they extract from their franchises. Throw in operating metrics as well as reporting, and data permeates just about every part of the business.
Last week in Illinois saw the US government respond to a motion to dismiss its indictment of Jitesh Thakkar, who is accused of aiding and abetting Navinder Sarao in his spoofing activities by providing him with the technology to conduct that strategy. The case has some serious implications for fintechs and software programmers to the financial markets industry generally, but what I really want to know is; assuming a successful conviction, what will the US Gun Lobby make of it?
In this week’s In the FICC of It podcast, Galen Stops breaks ranks to say he found one of Colin Lambert’s columns interesting, while the latter makes an appeal for expert knowledge on risk-free rates – if only so he doesn't have to blag another podcast feature.
They also discuss the latest unfair dismissal outcome in the UK in which yet another FX dealer was found to have been wrongly sacked, as well as the potential implications for the fintech industry from a legal case in the US. In a busy podcast they also dispel some myths about AI – while at the same time making a big statement (is there any other kind?) on what will make AI trading successful; and they pick out their early selections for must-not-miss sessions from Forex Network Chicago in September.
Profit & Loss’s latest OnTheBlock series featured a one-one-one discussion with former CFTC staffer Justin Slaughter, now a partner at Mercury Strategies, in which he provided an insider’s perspective on how cryptoassets are being viewed by regulators in Washington, DC.
P&L OnTheBlock: An SEC official recently said that the agency does not view ether[eum] as a security. Does this mean that the issue is settled and the SEC definitely won’t try and regulate it as a security now?
Justin Slaughter: What we are basically hearing is that there isn’t an explicit, major problem with ether as a security. They are not yet saying it's totally, absolutely, not a security.
Colin Lambert talks to David Faulkner, head of business development at Fluent Trade Technologies, about the need for new thinking around how the FX industry evolves technology; the case for outsourcing non-IP processes and how technology can play a key role in helping a firm adhere to the FX Global Code of Conduct. They also discuss how this can help larger trading firms compete more successfully with smaller, nimbler trading firms in markets, as well as better focus their investment dollars.