Jon Light for DevStyler: the Key Trends in FX Technology
DevStyler: Mr. Light, You’ve taken on the position of Vice President (VP) of Trading Solutions at Devexperts Bulgaria several months ago. What’s your mission in Bulgaria?
Jon Light: Yes, I moved to Bulgaria in March this year from London. I am really enjoying it here and am very happy to have found Devexperts. It’s great to work somewhere where we are using the best technologies, and we have a really great team.
I am a product manager. I have experience working across all areas of the foreign exchange market. Our main client base focuses on building solutions for the retail market, and one of my specific missions is to investigate how we can service the institutional FX market.
DS: The online trading industry has come a long way since its inception over 20 years ago and as financial technology gets more and more intelligent, brokers and tech providers need to adapt their strategies accordingly to stay ahead of the game. What are the key trends in FX technology?
JL: Yes, the FX Market has come a long way and follows the general trends we see in technology. When I first started working for a broker in London, a lot of trading was still done over the phone and then written up manually on trade tickets. This was prone to errors. FX trading was something only big institutions could partake in. My role was to bring this up to date, so we built a trading platform and made all trade and post-trade flows electronic. This made the trading desk much more efficient.
The FX market is the largest in the world, with 5 trillion USD traded daily, and probably even more. It’s OTC (over the counter) rather than on an exchange, trades are generally bilateral, so there is no way to know the total market size. Today the market is open to everyone, and there are several ways to trade.
Because of the move to electronic systems has made it easier and cheaper to trade, the average trade size has reduced, but the volumes have increased. This has meant that platforms have to deal with a much larger number of trades and a larger number of participants. In an OTC market speed of execution is important, people now talk in microseconds rather than milliseconds, so lots of firms have had to adapt. Some of the pioneers of electronic trading are now behind the newer entrants in this area. Also, the way people trade has changed a lot over the past 20 years, the first FX trading applications were dedicated machines or installed applications, now people are much more mobile and we have seen a lot of demand for mobile and web applications. We also have seen a lot of algo trading, this was first something only the biggest banks could invest in and run, today anyone can do this and run their own strategies. Trading platforms have also needed to become multi-asset, so on top of FX, we now need to be able to handle equities, cryptos, and other asset classes, as well as more complex instrument types.
DS: What do you think are going to be those biggest changes over the next 20 years?
JL: As the last 20 years have shown us the market can change massively, and technical innovations play a bit part in this. The market is open to everyone now. To stay competitive, brokers need to innovate, otherwise, there will be nothing to differentiate them, and there is now set functionality clients demand. Brokers will continue to make their platforms be able to support more asset classes, and we will see the average size of a trade size fall, even though the cost for the broker may not. Now everyone that has a smartphone in their pocket, and a basic internet connection can trade. We build a lot of mobile trading applications for our clients, and we see the demand growing. Initially, mobile trading was an additional feature on top of a traditional platform, now it’s many users core UI. So its complexity and trade types will continue to grow there. We also see demand for trading and position monitoring on wearable technology such as smartwatches, as well as chatbots that can connect into messenger platforms, Amazon’s Alexa and Google’s Assistant. People want to be able to interact with the markets wherever they are, so this will move into support in cars and when on the move.
In the institutional space, a key focus will be on reducing costs, as mentioned, trade ticket numbers will increase, but the cost to execute won’t. Larger firms will look to simplify their connectivity and post-trade processing to reduce costs. I see there being either a move to a system running on decentralised technology such as blockchain, or move to a trusted centralised provider where costs can be shared. Blockchain currently is not able to process the amount of transactions needed, and the bigger problem is that the larger firms which are slow-moving are not all in agreement on the technology. And then when you think about regulation which has such a say in today’s market it’s hard to see a massive change. But firms are working towards this and it’s really is an interesting space to watch.
DS: Devexperts is a renowned company to provide state-of-the-art technological solutions for the global financial industry. How do you implement the innovations for FinTech? (AR/VR, chatbots, IoT, etc.)
JL: Devexperts has to stay ahead of the curve and we invest a lot in new technologies and trends. Our clients have to be able to compete in their market and continue to evolve and offer new and exciting functionality to the end client. Because of our expertise in the financial markets, we can assess these trends and assign engineers to build proof of concepts for us to investigate further. We discuss and show these with our existing and potential clients, then take the decision to move forward when we have interest.
DS: Do you plan to hire more software engineers? What are the key requirements? How do you stay ahead of your competition today?
Fintech is a challenge, a mix of tough requirements of high performance, security, scalability, reliability, and usability all at once. Traders need performance, instant utility and, in general, this is a high stakes game. That’s why we are doing our best to fulfill the market demand for the best and cutting edge technologies. And we are happy to work with people who are ready for such a professional challenge.
The interview was originally published on Devstyler.io
Jon Light is an experienced senior product manager with a deep expertise in foreign exchange, working with brokers, banks, trading venues, and buy side firms to deliver industry platforms and client solutions. He holds a VP of Trading Solutions position in Devexperts. It is a product management role that uses his knowledge of the FX market. Jon bridges the gap between the business and technical teams on capital markets trading and execution systems ranging from UIs to complex backend execution engines.