BGC Partners has recently started delivering white label FX algo solutions to the sell side. What prompted this move?
BGC Partners has had significant success with our award-winning Equity Algo platform and decided to expand into other products. FX was a natural progression but we recognized that establishing and building market-share in a crowded sell-side provider space was going to be challenging. So rather than compete with the banks, we decided to focus on establishing partnerships to provide highly customizable tools and allow our bank clients to focus on other areas of differentiation with their end clients. At a high level, the FX algo space is somewhat commoditized with most providers offering strategies that fundamentally do similar things. We realized that our cutting-edge technology coupled with our flexible implementation would allow us to provide individual solutions that banks could bring to market with minimal effort and investment.
Have there been any notable changes in the market which are driving demand for these services?
Institutions have always been focused on managing costs and as profit margins have shrunk, reducing costs has been key in trying to maintain profitability. More and more, banks are realizing that the cost of building, testing, enhancing and supporting solutions can be significant so outsourcing commoditized solutions has become a great way to reduce costs. While FX Algo usage continues to grow, we’ve had feedback from banks indicating that the investment for an internal FX algo build doesn’t always justify the returns. White labelling algos is one way that banks can reallocate spend and resources towards enhancing their strengths and differentiators while allowing them to continue providing the execution capabilities that their clients need. FX providers recognize that any significant player in the space must have algos in their offering so partnering with BGC provides an easy, economical entry into the space.
What can leading FX providers expect in terms of unique benefits when they partner with you?
We are commercially flexible and focused on partnerships that benefit both parties. We have an extraordinarily customizable product: existing strategies can be enhanced to accommodate specific client requirements and new strategies can be easily added to provide clients with the best execution options available. We’re also able to leverage the BGC Global Markets support team and infrastructure to provide world-class support to all of our clients.
How do you customise your offering to meet the different needs of various FX providers? For example, an established tier one bank compared to a newer entrant to the FX algo space.
Established banks with large client bases can leverage our client level customization capabilities to accommodate different system requirements while newer entrants can shorten the time to market and reduce spend on building solutions and connectivity. Both types of firms will benefit from our internalization capabilities and cost savings provided through our platform and our Global Support model.
Providers will need to respond to the changing needs of their clients, particularly as they grow in sophistication. What is the level of flexibility and support you offer to providers to help ensure they are meeting these needs?
Our framework offers extensive customization capabilities from simple adjustments within our existing strategies to the creation of bespoke strategies using our extensive library of components. Our research and development teams are constantly working to improve our product offering and the underlying components based on proprietary TCA framework so clients will benefit and see savings from our regularly scheduled upgrades.
What are the benefits of taking a long-term approach with banks and working closely with them as a partner to build their FX algo offering?
Our bank partners have strong, longstanding relationships with their clients. Our approach is to establish strategic relationships with these partners to help them provide a best-in-class algo execution service to those clients. Our dedicated algo development team is constantly monitoring executions and working to adjust strategies to ensure best execution for end clients. This approach works well for our bank partners because it allows them to focus their resources and spend on true differentiators while still providing a full suite of execution mechanisms in a very commoditized space. In addition, our clients get access to our top-notch Quant team to get input on strategy changes, parameter adjustments and new execution methodologies.
Why does the scale and experience of BGC Partners stand to benefit banks in terms of the level of support they can expect to receive?
As mentioned earlier, we have the size and scope of the BGC Partners Global Markets support team behind us. Our FX Algo support team provides proactive customer service, live phone support and quick email responses from specialists with subject matter expertise. The main goal of this team is to provide regular communication and speedy resolution for all issues. This team also collects and collates detailed information on all client requests and issues for trend analysis and prioritization of future development.
What are your plans to grow and further enhance the offering over the coming year?
Our FX product roadmap for 2021 is focused on adding NDF algos to the suite and adding strategies based on market feedback. We have also prioritized adding artificial intelligence to our strategy logic and are constantly focused on enhancing our smart order router to minimize market impact and improve client experience. Finally, we regularly review our liquidity provider quality and performance and make changes to ensure clients have access to optimally curated pricing. Beyond FX, we are rolling out US Treasury algos – we’ve already started conversations with clients and expect adoption to be swift.
For more information about White Labelled solutions from BGC Partners please contact: