Sucden Financial e-FX in the News

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Sucden Financial e-FX in the News

FINANCE These articles have been edited and reproduced with kind permission from the above media.

October, 2015

FINANCE September, 2015

Sucden Financial Promotes Gavin Parker to COO In his new role as COO, Mr. Parker will be based out of Sucden’s London office. He has been a mainstay at Sucden Financial since 2007.

Sucden Financial has once again made a key appointment to its executive personnel group, this time promoting Gavin Parker to the role of Chief Operating Officer (COO), who steps into the role with immediate effect.

In his new role as COO, Mr. Parker will be based out of Sucden Financial’s London office. He has been a mainstay at Sucden Financial since 2007, when he originally joined the group as its Director of Information Systems, a position he has served in for almost nine years.

In addition to Sucden Financial, Mr. Parker has also garnered extensive experience at a number of other financial service providers and banking institutions, part of a lengthy career spanning nearly three decades back to 1986. He has held senior level roles at Trading Technologies, Rolfe & Nolan Systems Ltd, and RTS Realtime Systems Ltd, among others, according to information made public on his LinkedIn profile.

April, 2015

Wayne Roworth

FINANCE January, 2015

October, 2015

Sucden Financial Adds Ayhan Gurcuoglu to Its e-FX Team Mr. Gurcuoglu joins Sucden Financial with over fifteen years of experience across Turkish financial markets.

Sucden Financial has bolstered its Turkish operations, appointing Ayhan Gurcuoglu to its e-FX team as its newest Regional Manager, according to a Sucden statement.

In this new role as the Regional Manager of Sucden’s Turkish e-FX team, Mr. Gurcuoglu will be tasked with supporting the firm’s growing e-FX client base in the region – he will be reporting to Wayne Roworth and Peter Brooks, co-Heads of Sucden Financial’s e-FX team.

Mr. Gurcuoglu joins Sucden Financial’s London office with over fifteen years of experience across Turkish financial markets, including his most recent stint at Sanko Securities, where he worked as its Foreign Markets Assistant Manager. Throughout the duration of Mr. Gurcuoglu’s career, he has focused on futures, contracts-for-difference (CFDs), and foreign exchange (FX). Additional stops include Tera Brokers and Raymond James, having held senior positions at both firms.

According to Mr. Ayhan in a recent statement on the appointment, “Sucden Financial has a global reputation for excellence and a prestigious client base in Turkey. I am looking forward to servicing our existing relationships in the region and sharing my knowledge about the local markets.”

“We are delighted to welcome Ayhan to our team. His experience and local knowledge will be invaluable, helping us to strengthen the support we offer to our Turkish clients. Ayhan has worked with many UK companies whilst based in Turkey and will be a real asset to the team,” added Mr. Brooks in an accompanying statement.

Last month, Sucden Financial also made a notable move, promoting Gavin Parker to the role of Chief Operating Officer (COO). He originally joined Sucden Financial in early 2007, having since worked as its Director of Information Systems, a position he had served in for over eight years.

Sucden Financial Limited is not licensed by the Turkish Capital Markets Board (the “CMB”) pursuant to the Capital Market Law (No. 6362). Accordingly, nothing in this communication intends to solicit, offer, market or sell capital markets instruments or financial services in the Republic of Turkey and shall not be construed as such.

October, 2015

What Whatdo do brokers brokerswant want from fromtheir their Liquidity Liquidity Provider?

Provider?

What What dodo organisations organisations really really want want from from aa Liquidity Liquidity Provider?

Provider?

How How have have attitudes attitudes and and priorities priorities changed changed since since SNB SNB events? events?

Leading Leading London-based London-based Prime Prime ofof Prime Prime Broker, Broker, Sucden Sucden Financial Financial conducted conducted extensive extensive research research toto address address these these questions questions amongst amongst brokers, brokers, banks, banks, fund fund managers managers and and professional professional traders traders across across the the globe. globe.

The The results results provide provide insight insight into into current current market market requirements requirements and, and, asas Peter Peter Brooks, Brooks, co-head co-head ofof e-FX e-FX atat Sucden Sucden Financial Financial explains, explains, highlight highlight aa major major shift shift inin priorities. priorities.

In In order order to to remain remain at at thethe forefront forefront of of thethe industry, industry, wewe have have always always listened listened and and responded responded to to market market feedback. feedback.

When When wewe conducted conducted online online research research to to gain gain market market intelligence intelligence between between 1818 November November 2014 2014 and and 1414 January January 2015, 2015, wewe obviously obviously had had nono idea idea thethe SNB SNB events events would would occur, occur, completely completely changing changing thethe industry industry landscape. landscape.

We We repeated repeated our our research research post post SNB, SNB, between between 1414 May May and and 1414 July July 2015 2015 to to assess assess thethe change change in in attitudes. attitudes.

The The 256 256 responses responses to to thethe surveys, surveys, combined combined with with our our own own insight insight from from discussions discussions with with potential potential clients clients and and industry industry inflinfl uencers, uencers, provide provide usus with with a huge a huge | october | october 82 82 2015 2015 e-FOREX e-FOREX

amount amount of of confi confi dence dence that that wewe areare able able to to meet meet allall thethe new new key key selection selection criteria criteria of of brokers brokers seeking seeking to to change change Liquidity Liquidity Providers Providers - depth - depth of of liquidity, liquidity, tight tight spreads, spreads, low low counterparty counterparty risk risk and and high high levels levels of of service. service.

TIME TIME FOR FOR AA CHANGE? CHANGE? According According to to our our research, research, post post SNB, SNB, 38% 38% of of brokers, brokers, banks banks and and fund fund managers managers who who responded responded to to our our survey survey have have or or areare considering considering switching switching Liquidity Liquidity Providers Providers (LPs).

(LPs).This This confi confi rms rms thethe general general discussions discussions wewe have have been been having having with with

Source: Sucden Financial Limited Source: Sucden Financial Limited

Source: Sucden Financial Limited Source: Sucden Financial Limited

EXPERT EXPERT OPINION OPINION

Have Have youyou changed changed Liquidity Liquidity Provider Provider post post SNB? SNB?

If you If you areare considering considering switching switching Liquidity Liquidity Provider Provider post post SNB, SNB, what what areare thethe main main reasons? reasons?

when selecting selecting a Liquidity a Liquidity Provider Provider and and continue continue many many firms firms recently recently which which highlight highlight thethe massive massive when bebe so.so.

In In fact, fact, after after depth depth of of liquidity, liquidity, spreads spreads industry industry adjustment adjustment that that is taking is taking place. place.

The The first first to to areare thethe main main reason reason why why a broker, a broker, bank bank or or fund fund wave wave of of brokers brokers switching switching LPsLPs was was forced forced upon upon manager would would currently currently seek seek to to switch switch Liquidity Liquidity many many as as some some brokers brokers went went out out of of business business and and manager Provider, Provider, according according to to our our post post SNB SNB research. research. many many banks banks and and Prime Prime Brokers Brokers started started cutting cutting their their client client base. base.The The PBPB and and bank bank cull cull stillstill There have have been been many many reports reports in in thethe media media about about continues, continues, but but increasingly increasingly wewe have have seen seen clients clients There spreads widening widening post post SNB SNB and and there there is much is much start start to to switch switch providers providers through through their their own own choice. choice. spreads discussion discussion in in thethe market market to to back back this this up.up.

After After anan initial initial widening, widening, wewe have have seen seen spreads spreads at at Sucden Sucden Sucden Sucden Financial Financial has has seen seen anan influx influx of of new new Financial Financial tighten tighten – and – and it isit no is no coincidence coincidence that that clients, clients, particularly particularly large large brokers, brokers, who who have have have have also also seen seen our our business business grow. grow.We We areare in in traditionally traditionally worked worked with with a Prime a Prime Broker Broker but but now now wewe a position a position to to offer offer tight tight spreads spreads due due to to thethe strong strong find find thethe terms terms and and requirements requirements onon offer offer to to bebe relationships relationships wewe have have developed developed with with thethe banks banks unfavourable. unfavourable. over over many many decades decades and and this this has has really really helped helped usus DEPTH DEPTH OFOF LIQUIDITY LIQUIDITY AND AND QUALITY QUALITY OFOF to to stand stand out out from from thethe competition, competition, providing providing anan EXECUTION EXECUTION offering offering which which is hugely is hugely in in demand. demand.

Sucden Sucden Financial Financial has has maintained maintained itsits banking banking SHIFT SHIFT FROM FROM COST COST TOTO COUNTERPARTY COUNTERPARTY liquidity liquidity relationships relationships and and worked worked hard hard with with thethe A A RISK banks banks to to ensure ensure clients clients continue continue to to have have thethe same same RISK Interestingly, before before SNB SNB events events potential potential new new high high quality quality of of execution, execution, regardless regardless of of ticket ticket size. size. Interestingly, clients clients seldom seldom asked asked usus forfor our our financials financials and and Across Across Sucden Sucden Financial’s Financial’s entire entire client client base base wewe always focused focused heavily heavily onon costs. costs.

Post Post SNB, SNB, virtually virtually have have seen seen rejection rejection rates rates fallfall from from last last year’s year’s 1.8% 1.8% always allall potential potential clients clients request request our our audited audited financial financial to to under under 1% 1% this this year year to to date. date.

ForFor some some of of our our information. information.

Safety Safety and and security security of of funds funds is now is now largest largest retail retail broker broker clients, clients, rejection rejection rates rates have have just just as as important important as as finding finding thethe best best value value LPLP to to been been as as low low as as 0.1-0.3% 0.1-0.3% this this year. year. work work with. with.

This This puts puts usus in in a very a very strong strong position position TIGHT TIGHT SPREADS SPREADS ARE ARE POSSIBLE POSSIBLE because because Sucden Sucden Financial Financial is ais highly a highly diversified diversified Spreads Spreads have have always always been been a key a key factor factor forfor clients clients business, business, with with a net a net worth worth of of over over $100 $100 million. million.

With With a history a history of over of over 40 40 years years in the in the financial financial markets, markets, Sucden Sucden Financial Financial provides provides clients clients with with access access to 100% to 100% STPSTP FX FX andand bullion bullion liquidity. liquidity.

CFDs CFDs andand futures futures cancan also also be be streamed streamed viavia its its APIAPI andand clients clients benefit benefit from from tailor-made tailor-made solutions solutions utilising utilising thethe latest latest cutting-edge cutting-edge technology. technology.

Sucden Sucden Financial Financial Limited Limited is authorised is authorised andand regulated regulated by by thethe Financial Financial Conduct Conduct Authority Authority (FCA).

(FCA).

ForFor further further information, information, please please contact contact etrading@sucfin.com, etrading@sucfin.com, callcall +44 +44 (0)203 (0)203 207207 5000.

5000.

Follow Follow us us @sucdenfinancial @sucdenfinancial or visit or visit www.sucdenfinancial.com www.sucdenfinancial.com

| 83 | 83 october october 2015 2015 e-FOREX e-FOREX

August, 2015

This has got to be good for STP brokers…

Sucden Financial on this week’s volatility LeapRate Exclusive… The market activity and volatility across all financial instruments the past few days is not unprecedented, but it certainly has been challenging from a risk management perspective for retail forex brokers.

Especially in the shadow of what happened to the industry on January 15 when the Swiss Franc spiked in value by 20%, sending shockwaves through the sector and forcing brokers to re-look at how they go about managing their book and handling volatile situations.

We’re pleased to have the opportunity to get the perspective of Michael Davies of Sucden Financial, a leading liquidity provider to Forex brokers, as to what has indeed happened the past few days and how brokers have handled things.

LeapRate: Michael – thanks for joining us today during what must be a very busy time for Sucden. It is an understatement to say that the market is volatile right now. Huge daily swings, huge intraday downs and ups and back down. How did the past few days go at Sucden? Were you seeing much higher volumes from your clients?

Sucden: Sucden Financial is a liquidity provider to a great number of brokers and as such we feel we can gain a fairly good representative insight to the FX trading activity for these types of firms. The increase in volatility, as indicated by the spike in the CVIX back to levels of late June / early July when the market faced uncertainty from Grexit fear, has led to a surge in volumes. This has got to be good news for STP brokers, who are benefiting in particular from what would normally be a sleepy summer quiet period.

LeapRate: How was Monday’s action different from January 15’s ‘Black Thursday’ action after the surprise Swiss Franc spike from your perspective? Do you operate any differently as a result of January 15? Were there any risk management lessons you believe the Forex brokers took from January 15 which were applied in a trading market like this?

Sucden: Yesterday’s events were nowhere near the magnitude of January 15th, both in terms of market volatility and disruption. On January 15th post the SNB announcement banks stopped quoting for at least half an hour in certain pairs, whilst yesterday we only saw a few minor currencies like EURNZD disappear for up to a minute on some bank platforms.

Most brokers would have fared much better yesterday as the really big moves were in less traded currencies, although we did see some sizable moves in majors like USDJPY, which would have resulted in a few brokers being on call. Sucden Financial continues to require clients to post more margin since the SNB event and yesterday’s large moves vindicates the prudence of that policy.

LeapRate: What message are you giving your clients in this market?

Sucden: Now is not the time to be aggressive and compete on margins. Its a hard message to deliver to leverage hungry clients, but clients have got to start considering sound risk management principles over factors like cost when selecting their broker.

LeapRate: We reported earlier on some technical problems US online brokers experienced on Monday resulting from the surge in volumes. Did you see any of that among your Retail Forex Broker clients?

Sucden: No we are not aware of any problems, our clients seem to have weathered that storm just fine.

October, 2015

FX Liquidity Transformation Post SNB – Q&A with Sucden Financial LeapRate is pleased to present the following Q&A session with Wayne Roworth, co-head of e-FX at Sucden Financial in London.

I believe that FX liquidity has changed fundamentally post SNB. It may not be obvious to the casual observer but there’s been a considerable reduction in liquidity supply combined with higher volatility.

What are the main causes for this shift?

There are two principal reasons; since the events of January both bank and non-bank liquidity providers have been actively evaluating the effectiveness of their pricing algorithms during volatile market conditions.

A new framework for liquidity distribution during illiquid markets and high volatility events has been established.

In practical terms sell-side providers have revised the speed and sensitivity of pricing streams to reflect this new regime.

Another cause is risk appetite reduction, with many market-making banks being castrated by changes in regulation. Although this pre-dates January’s event it’s been a further catalyst for risk seeking firms to revisit their strategy. The consequence of risk aversion is less internalisation and subsequently higher trading costs.

A more conservative view on warehousing risk means there is greater demand for liquidity but due to higher volatility, trading costs have increased. This leads to a cycle whereby market-makers in the primary markets are forced to reduce the amount/size of liquidity they are streaming to their buy-side takers.

We’re left in a state of instability, where demand for liquidity is ceaseless and accessibility easy but dependability is diminishing. The distribution of available liquidity around the price has lessened and buy-side clients are moving towards OTC derivative products to express their market views.

What is the future for FX liquidity?

Although the Swiss event was a game changer for the FX market and the current regime will likely remain in force for at least the medium term, there is some positive change happening. Exchanges have a renewed interest in FX as an asset class and although I don’t believe FX will move entirely to exchange trading, I do see their participation and market share continuing to grow. Sucden Financial is well placed to take advantage of this development; as a member of many of the world’s major exchanges the firm manages a large futures business. When client demand shifts towards exchange-traded FX and clearing we will be ready.

With the exception of a handful of tier one banks I see a trend towards a more specialist offering from market-makers. Resources are limited and a focus on franchise currency pairs is a subject that’s coming up more frequently. Typically banks have a specialist region and therefore a competitive advantage in a specific sector rather than trying to be everything to everyone.

What approach does Sucden Financial take?

Sucden Financial has been unaffected by the liquidity changes, in fact we’ve seen an overall reduction in our spreads this year. I put this down to several factors; firstly, we have a great relationship with all of our liquidity providers (LPs), we operate in a clean and transparent fashion, we provide regular data to LPs and work hard to ensure we maintain an optimal number of LPs. We have a great selection of tier one bank providers, augmented with specialist non-bank hedge funds. The goal is to remain meaningful to our bank and non-bank LPs and to provide a comprehensive service to our clients. Sucden Financial provides extremely competitive pricing, high fill ratios (98.9% in September) and a wide range of products.

Consistency and sustainability are the two factors our clients are most interested in. We are not in the game of offering short-term deals to attract new clients and then not being able to deliver on those promises. We see our clients as long-term partners and work closely with them to continually improve the quality of their pricing. These principles form part of Sucden Financial’s DNA and are one of the key reasons for our growth and success during the past 42 years.

July, 2015

View Viewfrom fromthe theTop: Top: Sucden Sucden Financial Financial continues continues toto grow grow

Wayne Wayne Roworth, Roworth, Co-head Co-head of e-FX of e-FX at Sucden at Sucden Financial Financial explains explains why why the firm the is firm in aisstronger in a stronger position position than than ever ever post post SNB events.

SNB events.

“It’s our “It’s 42nd our year 42ndinyear business in business1. COLLATERAL 1. COLLATERAL / / We areWe a multi-asset are a multi-asset brokerage brokerage BALANCE BALANCE SHEET SHEET and Sucden and Sucden Financial Financial continues continues with awith significant a significant presence presence in in It is widely It is widely understood understood that that futures, to go from to gostrength from strength to strength,” to strength,” futures, particularly particularly metalsmetals and and since SNB theevent SNB event there there soft commodities. he explains. he explains.

“As one “Asofone theof the since the soft commodities.

We believe We believe has an been increase an increase in the in the there is largestlargest Prime Prime of Prime of Prime (PoP) (PoP) has been there still is significant still significant risk risk minimum balance balance sheet sheet and and for those providers, providers, we believe we believe that that minimum for those firms solely firms solely focused focused collateral requirements requirements from from on FX,on our heritage our heritage and the and strength the strengthcollateral many FX, many of which of which could could tier-one prime prime brokers. brokers.

Sucden Sucden of ourof offering our offering have helped have helped tier-one be at risk be at ofrisk losing of losing their PB their PB Financial is fortunate is fortunate to be in to be inrelationship, us to thrive, us to thrive, despite despite recentrecent Financial relationship, so it isso important it is important a strong financial financial position position that that challenging challenging conditions conditions in the in thea strong to have toahave backup a backup in place. in place. comfortably comfortably exceeds exceeds these these new new market. market.

There There is no doubt is no doubt that that At Sucden At Sucden Financial Financial we have we have conditions.

Potential Potential clientsclients two PBs. the Prime the Prime of Prime of Prime world world is is conditions. twoUniquely, PBs. Uniquely, we also we also citeasthis a key as requirement a key requirementhave direct in the in midst the midst of change of change since since cite this have direct relationships relationships with with choosing choosing a Prime a Prime of Prime of Prime the events the events of 15th ofJanuary 15th January when when nine banks, nine banks, furtherfurther reducing reducing partner and more and than moreever thanwe ever we 2015.2015.

For us,For it has us, it presented has presentedpartner our dependency our dependency on anyonone any one are being asked asked to demonstrate to demonstrate an opportunity. an opportunity.

It is becoming It is becomingare being provider. provider. our financial position position increasingly increasingly apparent apparent that that our financial 3. SPREADS 3. SPREADS and provide our financial our financial the larger, the larger, betterbetter capitalised capitalised and provide Another Another consequence consequence of of statements. and diversified and diversified Prime Prime of Prime of Primestatements.

‘Black ‘Black Thursday’ Thursday’ is thatisFX that FX brokers brokers are gaining are gaining increasing increasing 2. COUNTERPARTY 2. COUNTERPARTY PROFILE PROFILE liquidity liquidity provision provision is under is under marketmarket share,share, and asand such, as we such, we We understand We understand that some that some scrutiny. scrutiny.

Although Although underway underway are feeling are feeling optimistic optimistic about about our our tier one tierprime one prime brokers brokers are are for some for some time now, time there’s now, there’s futurefuture growth.” growth.” reviewing reviewing their exposure their exposure to to been abeen redoubling a redoubling of efforts of efforts the entire retail FX retail market.

FX market. to balance to balance the volume the volume WayneWayne highlights highlights five key five key the entire Sucden Financial Financial is a highly is a highly versusversus value equation; value equation; bank bank changes changes post SNB postevents SNB events and andSucden company, company, meaning meaningliquidity liquidity providers providers are carefully are carefully explains explains why Sucden why Sucden Financial Financial is diversified is diversified the banks the banks do notdo generally not generally considering considering who they whostream they stream a key partner a key partner for medium for medium and and categorise categorise us as an us FX as an broker.

FX broker.liquidity liquidity to andtohow andithow is it is large brokers. large brokers. | julye2015 july 962015 -FOREX e-FOREX

4. PB COSTS As PBs raise both their fees and margin requirements, we believe these additional costs will inevitably filter down to the clients of Prime of Prime brokers.

Fortunately, Sucden Financial is in a fairly unique position as a PoP as we have so many direct relationships, enabling us to keep our cost base low because we do not need to give up every trade to our PB.

5. RISK In the aftermath of the SNB move almost all FX market participants have asked the same question, “What could we have done differently?”

There has been a renewed focus on risk management systems that reside on the trading infrastructure. Low latency pretrade checks, combined with intelligent instrument concentration rules are the main subject of conversation. As you would imagine there is a special focus on currency pairs that are not free floating.

Sucden Financial has been in business for over 40 years, with dedicated departments continually monitoring and managing market and counterparty risk. The firm has always taken a prudent approach to risk, which has led to solid, consistent growth over the decades.

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CAPITAL BROKERSto winPROVIDERS Sucden Financial Limited is authorised and regulated by the Financial Conduct Authority.

With a history of over 40 years in the financial markets, Sucden Financial provides clients with access to 100% STP FX and bullion liquidity. CFDs and futures can also be streamed via its API and clients benefit from tailor-made solutions utilising the latest cutting-edge technology. Sucden Financial Limited is authorised and regulated by the Financial Conduct Authority. For further information, visit: www.sucdenfinancial.com

july 2015

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SPONSORED STATEMENT

consumed. Since Sucden Financial operates in a clean and transparent way, our liquidity providers are happy to compete for our business, enabling us to offer our clients some of the tightest pricing available in the market. Combined with a dedicated liquidity management focus, the outcome for our clients is significantly improved spreads, which equate back to early 2014 levels when volatility was lower.

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September, 2015

Sucden Financial’s Michael Davies explains the importance of managing counterparty risk in FX The fifteenth of January two thousand and fifteen.

Saying those words evokes memories of a day of extreme uncertainty for many, and the end of the road for some. At the very best it is an all encompassing reminder of a day which transformed the landscape of this industry, whether the firm concerned was a technology vendor, a retail broker, or indeed, a prime brokerage.

Counterparty risk is a subject which rose to the forefront of the agenda for many companies following this event, however the stable door was wide open and the horse had long since run for the hills by the end of that particular dark day, with negative client balance exposure in the hundreds of millions of dollars across the industry.

One reason that counterparty risk has become a very critical point for examination is that many retail FX firms put faith in their Prime of Prime (PoP) broker, understanding that all order flow and risk management would be effectively outsourced and conducted by that entity. After a year of low volatility, the Swiss National Bank created a storm akin to raising a spinnaker in a force 9 gale, which not only saw the end for many retail firms, but also some PoP brokers as there was not enough collateral at hand to be able to manage such a sudden bout of market turbulence in the vast majority of cases.

Today, Andrew Saks-McLeod, CEO of FinanceFeeds was at Sucden Financial’s London headquarters, where an important insight could be gained into how to structure a company which can weather any such storm. Michael Davies, Senior Sales Manager at Sucden Financial explained to FinanceFeeds “The SNB event highlighted just how important it is to consider the financial strength of the counterparties a broker works with. Those companies with weaker financials were not able to withstand a financial blow that the large CHF move caused for many.

“Going forward it is essential to consider whether the liquidity provider a broker works with is able to survive an extreme market event. We have been surprised at how many Prime of Prime brokers seem to have only a few million dollars of capital, which would hardly leave them capable of surviving even a relatively small loss. Sucden Financial has a capital base of over $100m and is part of an even larger group, Sucres & Denrées, a global market leader in physical commodities, employing over 4000 people in over 30 locations around the globe” said Mr. Davies.

“Post SNB the banks and Prime Brokers are reviewing the financial strength of many of the companies they are working with and are continuing to cut the facilities of many of their broker clients who do not meet their ever increasing minimum capital requirement.”

Michael Davies, Senior Sales Manager at Sucden Financial

“In addition, the banks are not just considering the financial strength of the companies they provide liquidity and prime brokerage services to, but also how diversified they are. At Sucden Financial our FX business is highly diversified, in that we provide liquidity to a wide range of different types of clients.

Actually our 30 year history in Institutional FX started by providing FX services to the large physical commodity related companies” said Mr. Davies.

Vital solidity and reliability bolstered by vast physical resources Mr. Davies detailed that the related physical companies include large multi-national producers and consumers of physical commodities like mining, agricultural companies and manufacturers. In fact, although FX is a large part of Sucden Financial’s business, exchange traded derivatives is actually still their core business. This diversification is considered to be extremely positive to both their banking partners and clients alike. They believe that there is a huge risk of selecting a smaller prime of prime liquidity provider who could be at risk of losing access to the banking services they are so dependent on.

“One final point which I would like to expand upon is that not only is it important to consider strength of the counterparties you use for liquidity, but also the quality of the clients you take on board” detailed Mr. Davies.

“At Sucden Financial counterparty risk takes priority over commercial considerations. Sucden Financial has a Credit and Risk Committee, at which the financial strength of every counterparty we work with is considered, including every client we provide liquidity to as well. We have always set hard limits on the amount of exposure we have to any client based upon their financial situation and not just on how much money they hold with us. When you consider that it was actually the trading activities and losses of clients over the SNB event that caused financial difficulties for many brokers, you can see just how important this is.”

“It certainly seems as if many more brokers since January 15th are starting to consider counterparty risk more seriously as well. Although we always asked for audited financial information for every client we opened an account for, before the start of this year we were rarely asked for our financial information. Now though, many clients we bring on board ask for this information. We would strongly suggest that a broker obtains financial information on any new LPs they want to work with and also from their existing relationships, so that they put counterparty risk at the forefront of their decision making process” he concluded.

September, 2015

Why an FX industry COO must have a technological edge: Interview with Sucden Financial’s Gavin Parker It is relatively commonplace for senior operations executives within FX firms to have come from an industry background of investment banking or to possess a wealth of electronic brokerage experience.

In London’s highly sophisticated institutional FX environment, and most certainly among liquidity providers, financial technology is at the heart of operational leadership, hence the prestigious, long-established Sucden Financial’s decision to elevate Gavin Parker to Chief Operatiing Officer.

Mr. Parker joined Sucden Financial in May 2007 as Director of Information Systems a position which he held for eight and a quarter years until his promotion to Chief Operating Officer, highlighting both the long tenure at the company that many of its key staff commit to, as well as the firm’s understanding of the essential correlation between liquidity provision and proficient technical prowess.

A few years ago I gave an external presentation on the “Build vs Buy” arguments, with the pros and cons of each strategy. Putting to one side the higher risk elements of building, I would argue that over the last few years we have been able to develop specific functionality with enhanced stability and risk controls for our worldwide customer base, and retain control of what we consider to be a key differentiator and business driver – our systems. We have started an aggressive expansion programme to ensure these systems will be more than sufficient to cater for our customers’ future trading needs. – Gavin Parker, COO, Sucden Financial Mr. Parker has over three and a half decades worth of experience in enterprise technology, which is a highly notable accolade indeed.

After a three year position as IT Director at Fortis Bank between 1997 and 2000, Mr. Parker became Managing Director of RTS Realtime Systems, a company at which he spent four years before becoming Sales Manager at Trading Technologies, which led to his appointment at Sucden Financial in 2007 as Director of IT. Beginning his career in 1981, Mr. Parker has over 34 years worth of experience in technology, having joined Microdata Systems Ltd in 1981 as a Programmer, before moving to Canadian technology firm Noranda Corporation in 1983 as an Analyst/ Programmer, which led to two years at Cumulus Systems Ltd in a Customer Support capacity. Following this, he joined Fuji International Finance in 1986, a company with which he spent eleven years as Associate Director.

In order to provide a clear insight into the importance of technological expertise within today’s modern brokerages, FinanceFeeds spoke to Mr. Parker in great detail to look at this particular competitive advantage.

With an extensive background in commercial IT, mostly in senior directorship positions, do you think that by assuming the role of COO and board member it gives Sucden Financial a technological edge over rival institutions whose operations directors are from financial and trading backgrounds?

Sucden Financial has a long history of internal software development and over half of the IT department is made up of engineers and business analysts to support the ongoing development of Sucden Financial’s trading system (STAR) and the back office system (F2).

Gavin Parker, COO, Sucden Financial

My IT and trading specific ISV experience has always been of benefit to the company and we are well known for having one of the fastest and most stable systems, in key regions such as Asia. The Sucden Financial board is made of experienced leaders with complimentary skillsets and as such I think it is the balance of abilities which have made the company so successful.

Sucden Financial is a company which majors on its own very specific proprietary systems. How has your 8 years at Sucden Financial as Director of Information Systems led the formation of the systems and what is the most important factor surrounding developing in-house systems for institutional transactions such as commodities and raw materials?

A few years ago I gave an external presentation on the “Build vs Buy” arguments, with the pros and cons of each strategy.

Putting to one side the higher risk elements of building, I would argue that over the last few years we have been able to develop specific functionality with enhanced stability and risk controls for our worldwide customer base, and retain control of what we consider to be a key differentiator and business driver – our systems. We have started an aggressive expansion programme to ensure these systems will be more than sufficient to cater for our customers’ future trading needs.

You are joining the board with over 34 years in Information Technology, therefore you have witnessed vast developments. What is the most significant technological advancement in the financial technology sector over the last few years, and what is its value to the industry?

I would not say there is one specific thing, more a number of advancements across different technological and process streams that have led to improvements in resiliency, speed and functionality.

It’s all a matter of trying to sift through things and evaluating the value of doing something that will provide the business with an improvement and a high probability of success – whether that relates to the tightening of our regulatory controls, risk management capability, automation or stability. Sucden Financial is a large established and diversified company; what works well here is not necessarily going to work elsewhere.

FX BROKERAGE OPERATIONS

January, 2015

Minimising costs, Maximising opportunities –

taking the best route towards an FX White Labelling solution Caroline Henshaw discovers more about, how, in the competitive world of forex today, more and more hard-pressed brokers are choosing to concentrate their resources on areas where they can add value and outsourcing the rest to sophisticated white label service providers that can not only help start-ups enter the market but enhance existing businesses.

Daily currency trading volumes have more than tripled in the last 10 years to $5.3 trillion a day, drawing in a growing number of institutional and individual traders. But while the markets have grown in size, they have also grown in complexity, meaning brokers now have to deal with an increasingly varied and sophisticated set of clients.

Catering to those needs is expensive, putting pressure on budgets at a time when brokers are already struggling to preserve their profits in the face of an increasingly fragmented market, the multiplication of trading platforms and the rise of electronic

communication networks, or ECNs. Increased regulatory oversight has also heaped additional demands on brokers, driving up the cost of doing business just as tepid trading conditions have made it even harder for them to safeguard ttheir margins.

Retail solutions often mean brokers outsource not just technology but business activities to a white label provider. In some instances, a third party provides the vast majority of the resources required to build the retail FX business, with the broker or bank just providing their brand and marketing resources to the venture.

The advantage is that these pure white label offerings have an established reputation in the market and offer the entire service on a profit-share basis. However, they can limit clients to using their solutions and their liquidity, making them less flexible than other options which is an increasingly important consideration.

“Ultimately the decision on whether you acquire a platform or take a white label is a control versus resources equation which can be balanced differently depending on each broker’s unique situation,” said Peter Brooks, Co-Head of eFX at Sucden Financial.

sts,

–

TRUST THE MOST IMPORTANT CRITERIA

“Obviously, we would all like more control of our business. However, the flexibility to switch liquidity provider, for example, is a very powerful driving force for many brokers who choose to pass on the white label option. Many of the t, how, in the competitive clients Sucden Financial provides ard-pressed brokers are whitethey labels to, however, are more on areas where to sophisticated white focused on minimising resource help start-ups enter the requirements in the early stage of . their business.”

wards an ion

With all the different considerations, and all the different solutions in the market, Brooks believes trust is the “most important criteria” for many brokers when choosing a provider.

“A white label is much harder to switch than a liquidity provider and so brokers should be certain that they are dealing with someone that especially due to the sheer number of brokers, has a longtheestablished business, with increase squeezed spreads and the general in electronic trading versus voice. a good reputation, strong balance With voice trades being under scrutiny, the trend should sheet andcontinue, experienced althoughpersonnel,” this should not be a race to he said. zero.”

TIME IS MONEY For the myriad of new brokers on the scene, the key consideration when choosing a white label solution is often speed: time is money, and so the length of time it takes to get to market is of the essence. Today white label providers can create a systems in weeks, days or even minutes, helping to get start-ups straight to market.

Some have developed products aimed at new entrants that can create partial white labels for IBs in less than 5 minutes, with a branded platform, reports, a built-in back office for demo and a CRM. Others, like Sucden Financial, which only provide a trading platform white label, work with companies like Shift Forex and APIFX that offer complete one stop solutions, including incorporation, licensing, marketing and HR.

CUSTOMISATION IS KEY Brokers’ wish-lists can be long when trying to decide between the different functionality on offer and their demands and will vary particularly according to their client base, meaning WL providers need to be able to tailor their solutions to their market.

WHITE LABELS OFFER FULL SOLUTIONS

“Customisation and white labelling don’t often go hand in hand, so it is important to ensure whoever you choose can allow you to meet your target market’s needs,” said Brooks.

“Sucden Financial helps our clients customise their offering as much as possible. It’s not just about what products we put on their platform but how we manage the flow from the clients they have. Some of our clients, for example, have clients that trade in very large ticket sizes and so we tailor their trading platform and the liquidity they receive to better handle this business.”

“Going for thechanges cheapest These meanoption brokers now need to be able to offer their clients state-of-the-art could costtechnology, a lot more if you need to broad and deep liquidity pools and are constantly evolving to meet switch. Inproducts fact, itthat could completely changing market conditions and regulatory destroy your new business. Brokers standards. use our white label because they The problem is that developing such products can cost hundreds has of millions know Sucden Financial beenof dollars, take several years and require a large team of in business for over 40 years highly qualified personnel and to runisand develop.

100% STP, providing full post trade So, instead of going through the complex transparency.” and expensive process of building new technologies in-house, more and more are choosing to outsource to third-parties to provide the additional functionality that their clients demand.

Peter Brooks

“A white label is much harder to switch than a liquidity provider and so brokers should be certain that they are dealing with someone that has a long established business, with a good reputation, strong balance sheet and experienced personnel.”

FX BROKERAGE OPERATIONS FX BROKERAGE OPERATIONS

April, 2015

Trust, Trust,Technology, Technology,Liquidity, Liquidity, Credit Creditand andClearing Clearingpower power–– what whatisishappening happeningto tothe thebuilding building blocks blocksof ofFX FXPrime PrimeBrokerage Brokerage

After After years years ofof struggling struggling toto adjust adjust toto the the upheaval upheaval suffered suffered during during the the global global financial financial crisis, crisis, FXFX prime prime brokers brokers are are now now facing facing another another seismic seismic shift shift after after the the SNB’s SNB’s surprise surprise move move inin January.

January.

But, But, for for the the best-of-breed best-of-breed players players out out there, there, this this debacle debacle has has proved proved anan opportunity. opportunity.

Caroline Caroline Henshaw Henshaw investigates. investigates.

The role of FXPBs has evolved rapidly in recent years thanks to the growth of global FX markets, the increasing diversity of players trading in them and regulatory pressures.

“FX volumes have more than doubled in the last 10 years where FX has increasingly been seen as a new, separate asset class, providing alpha that is uncorrelated with

other asset classes,” says Wayne Roworth, Co-Head of e-FX at Sucden Financial. “Furthermore, there has been an exponential increase in the number of FX trading platforms and electronic communication networks, which allow buy-side firms to preserve their liquidity provider relationships whilst benefitting from price aggregation.”

FXPBs play an important role in international currency markets, providing both the essential clearing services and credit that financial institutions and exchanges from around the world need to trade with each other. They act as an intermediary between funds and two types of counterparties: institutional investors with shares to lend for short selling and commercial banks with money available for margin loans.

COUNTERPARTY RISK Counterparty risk has been high on the agendas of both prime brokers and fund managers since Lehman Brothers collapsed, leaving funds unable to access billions dollars of their assets. But the SNB move has made already picky clients increasingly conservative when deciding which FXPB to work with by exposing how highly leveraged many retail brokers were. Many clients now expect iron-clad guarantees that their deposits are safe and are also demanding to understand more about the business model of the PB they choose.

“Traditional bank FXPBs tend to offer a one size fits all approach, whereas our clients are in regular discussions with us about solving the everyday challenges they face.”

This could actually benefit more sophisticated PoPs who are seeing a rise in interest from clients that have been forced to search for new providers after the exodus of other brokers.

Roworth said this trend has become particularly clear in the retail space, which has seen the greatest fallout from the SNB’s January move, and will feel the impact of the reduced availability of credit more than most.“The biggest opportunity will be seen in the prime-of-prime space where a small number of well capitalised firms will benefit from the ‘new world’. In this area we will see a flight to quality and those with sophisticated risk management tools,” he says. “Especially in the current challenging environment, FX trading firms primarily look for financial stability, an extensive history and a strong balance sheet.

Sucden Financial was established in 1973 and is one of the largest, independently owned brokerage houses in London. Our e-FX business is well placed to bolster our position as a well-capitalised, diverse and long-established business and we are already seeing an upsurge in enquiries.”

SEEKING A MORE COMPLETE SERVICE Clients have long been demanding a broader array of more technically complex services and tighter trade reporting from their providers.

Wayne Roworth

Roworth added: “Many traditional FXPBs have not been able to offer the range of products that a Prime of Prime can offer. For example, many retail brokers have also needed access to a wider range of CFDs, which most traditional prime brokers do not offer. An FX client of Sucden Financial can also access a wide range of markets, allowing them to maintain one relationship and keep their funds under the same roof. This is extremely useful considering many clients will trade a mixture of FX, commodities, equities and equity indices expressed as a CFD. “We’re increasing our product range in CFDs with emphasis on equity indices, improving our range of trading platforms and dedicating resources to liquidity management.

By creating bespoke liquidity pools we are ensuring our clients have access to deep and diverse liquidity and the best possible execution experience for their trading style.”

chnology, Liquidity,

40 years’ experience in financial markets is just the tip of the iceberg

Sucden Financial has been offering FX for 30 years and is one of the world’s leading institutional eFX providers •

2 Prime Brokers

•

7 Global Exchange Memberships

•

9 Direct Tier 1 Bank Relationships

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12+ Liquidity Providers

•

30+ Years in FX

•

$100M+ Capital

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150+ Tradable Products

•

200M EURUSD in One Click

etrading@sucfin.com | +44 (0) 20 3207 5608

Prime of Prime Liquidity Provider Sucden Financial Limited is authorised and regulated by the Financial Conduct Authority.

Established 1973