Live from iFXEXPO Asia 2016, top industry executives debate the best way of adapting trading solutions to China
Today, live from the iFXEXPO Asia 2016 here in Hong Kong, which is hosted by ConversionPros and Finance Magnates, prominent senior figures from across the world have debated the challenges which face many FX firms and software vendors when approaching vital markets, such as China, and how they can best navigate the challenges through adaptation […]
Today, live from the iFXEXPO Asia 2016 here in Hong Kong, which is hosted by ConversionPros and Finance Magnates, prominent senior figures from across the world have debated the challenges which face many FX firms and software vendors when approaching vital markets, such as China, and how they can best navigate the challenges through adaptation of technology to maximize regional opportunities.
Moderated by Ron Finberg, the subject of globalization was swiftly brought in to commence the discussion.
Eric Cui began by stating “We are a b-book, Hong Kong-based bullion broker. Prices have been going down across the world and therefore it has become more difficult to make b-book profits. Conversely, in STP bullion markets, liquidity is the major problem. We do provide aggregation, and try to connect as many liquidity providers as we can. We already have 10 different banks and have contracts with hedge funds and other B book brokers to divide our flow as best possible” he said.
“Localization is important and from the perspective of those working in this region, connection between Tokyo and China is a big problem. We set up a direct connection in Hong Kong and proxy server between Hong Kong and Tokyo, this is now operating at a latency of 300 miliseconds which is good for retail but not so good for institutional business, therefore we offer a virtual server to institutional traders” explained Mr. Cui.
Mr. Finberg then followed on from that point, and asked what are the factors that are caused by the Great Firewall of China, and how this can be navigated.
Andrew Ralich, co-founder & CEO of oneZero explained “Connectivity through the Chinese firewall is not only difficult but also inconsistent. One day you may have a solution and bring latency down, but the next it may well be disrupted. Connecting through areas like Tokyo and Hong Kong help get you to the other side of the world. As we all know, a lot of liquidity providers are coming out of London and going to Hong Kong and Tokyo, and considering your infrastructure is very important, for example working with good telecoms companies like Equinix, Cogent.”
Mr. Ralich continued to explain that local hosting is a very critical matter. “Brokers should work with localized telecoms solutions providers such as China Telecom, as these companies are vast, well established and have great experience in breaking through the firewall.”
Itai Damti, co-founder & CEO APAC Leverate, who is actually based in Hong Kong brought his technological experience into the fold.
“Asia has 2 great connectivity problems” said Mr. Damti. “One is accessing data, the other is moving data to and from China. These issues can be solved but only with large investments and expertise. What we do to reach China and South East Asia together is to combine a hosting of local data. It is becoming increasingly hard for small to medium brokers to resolve this with limited resources as it is a very expensive problem. There are ways that it can be overcome with good expertise, for example we recently saw a Taiwan-based broker which moved their data to our servers in London so that we could assist them in directing their traffic effectively to Asia” – Itai Damti, Co-founder & CEO, APAC at Leverate.
Paul Smith, founder & CEO Mobile Trading Partners, London & Hong Kong added “It is not enough just to get the data to Hong Kong or Singapore. It needs to be actually served locally. Connectivity, as Andrew says, is utterly unpredictable. Something that works in Beijing may not work in northern China for example. We put our charting data inside the firewall, there is no other option other than to host inside China. It is expensive but the only way.”
Albina Zhdanova,Executive Director at Tools for Brokers then stated “Ambira “With different countries and client bases, we work locally. This is very important with regard to latency, we can only do this by working with local liquidity providers.”
Quick to respond, Mr. Ralich replied “When looking at top tier liquidity providers it is very unlikely that youre going to get JPMorgan or Goldman Sachs to open a pricing engine in mainland China, therefore it is not as straight forward as attempting to work locally with liquidity firms directly. How do we therefore enable more B2B liqyidity available from brokers within China? One of the most challenging and exciting thing about FX is that it is so fragmented , therefore you don’t have to go to NYSE to trade Apple stock, for example, and I am therefore excited to see more brokers in China distributing liquidity.”
Mr. Finberg then posed the question “Are you seeing more brokers in China wanting to become liquidity providers for China?”
Mr. Damti quickly repsonded “”If someone says they want to be this kind of institution, this won’t be a company that you would want to put your money with in most cases!”
Moving on, Mr. Finberg asked “What type of technology is missing in terms of products in Asia that is really important for companies here to know about?”
Oded Shefer, Founder & CEO at CPattern answered “I think technology is not the full part of the story.”
“I think technology should be backed with work methods and concepts. Technology needs to be accompanied by good practices. We sometimes find that brokers in the Far East are very willing to accept traditional methods but when we start talking about things like retention automation, some are open and some are very apprehensive. Retention automation is a process in which we use computer software to enable alerts to retention teams and to optimize client databases. Sometimes we see slow adoption rates of such technology, largely centered around concerns about new things, and I am hoping that in this type of event we will be able to reduce these fears or concerns and encourage openness” Oded Shefer, CEO, CPattern.
Turning to Maor Lahav, co-founder & CEO of Panda TS, Mr. Finberg asked “Maor, when you are speaking to Asian customers are there products they’re not used to?
Mr. Lahav answered “When talking about localization this also includes communicating our services to clients, including services relating to aspects such as retention and support. What is missing with our products is connection to local applications like WeChat in China and communicating on local devices. Last year we talked about connectivity. Today we see localization as a full cycle. We had brokers that had amazing execution and connectivity, but when clients wanted to deposit, there may have been problem with the loading time of payment page, so now we are looking at the full service, we are seeing dedicated websites for the local markets.”
Mr. Damti then brought some debate to the opinions floated thus far. “If i may, I would like to politely challenge Oded” he said. “Asia is slow to adopt certain technology.”
Mr. Finberg then interjected, concurring that Mr. Shefer had been referring to certain big data scenarios and implementations. Mr. Damti continued that all technology is rapidly adopted, if not developed, in the APAC region. “In China, people pay for groceries with phones. In Indonesia and Malaysia, adoption of new ideas by young, urbane people is rapid. This whole continent is leading the world in technology.”
“Asia is not slow to adopt technology, it just has different cultural structure. I am a techy and came to Hong Kong bringing with me several years of experience at Leveate, and all I wanted to do is automate things. I was disolusioned in Asia. Hong Kong is an offline society, China is relationship based. The relationships between sales departments and customers that exist in the West, do not exist in China. Those wishing to succeed in this region need to give better value propositions to IBs, and understand their business model, but don’t try to force Asia into Western structures because it wont fit” – Itai Damti
“I agree with Itai, he is absolutely right” said Ms. Zhdanova. “If someone wants to implement something, there are a lot of overseas firms that have made efforts to enter the Chinese market and if they want to add something new they just do it in a short period of time. If there is an idea, there is a product, but the thing is that on all the platform side there is a lot of technology related innovation that companies need to provide educational material on first before it can all be automated. This is what technology vendors should do. They should not involve the end user client, because for clients to understand all this technology, brokers should understand how to localize the process, and tailor their products to local audiences without burdening the end users.”
Mr. Finberg picked up on this point, asking “How important is customization for different regions for platforms?”
Mr. Smith answered “It is not enough to make a simple localization. It is essential to have a user-centric design and this is missing from many Western providers who just convert the language. Products need to have been developed by using local design input that understands how apps and user interactions and culture works. Vendors cannot just bring in Western designers. Users are different in different regions, for example in America we would design something that works completely differently to what we would design for use in China. In the Appstore you could differentiate by having a different version popping up in different markets. There is a visibility question, and I do not know if there is a solution, other than that perhaps the initial landing page needs to be programmed to lead users to products that are important for their market.”
Concluding, Mr. Shefer said “I agree with Paul. Sometimes it really helps when we don’t only do translations but instead work with the clients to do proofreading and make sure that the content and the context are right for an intended region. Products cannot be copy pasted and instead should be modified to fit that region.”