Morning coffee with FXPRIMUS COO Stephen Leahy

New England. Middle class, picture postcard America….

.. and home to a number of very sophisticated FX enterprises.

Today, here in the Boston suburb of Peabody, Massachussetts, FinanceFeeds’ Andrew Saks-McLeod and Noam Stiekema had a morning coffee with Stephen Leahy, COO of FXPRIMUS, to take a look at the company’s current direction, and to discuss the current matters that are important in FX.

At The Depot Diner on Railroad Avenue, an all-American day started the all-American way with a round of fresh coffee, and corned beef hash omelette.

Mr. Leahy knows the Boston-based entities very well indeed, having been a Senior Dealer at IFX Markets for four years from 2002 to 2006, before becoming CFO of FX clearing firm United Global Markets Group, which led to his four year tenure at Back Bay FX.

After leaving Back Bay FX in 2010, Mr. Leahy was a Founder and Managing Member at CMAP (Capital Market Access Partners), where he remained for three years before becoming Head of Business Development at oneZero.

Joining FXPRIMUS in March this year, Mr. Leahy is responsible for overseeing the global operations of the company.

“I have been at FXPRIMUS for 8 months now, and one of the foremost things that I believe to be necessary is the need for transparency, both internally and externally. We are making a bit of a change internally, and we are giving more information down into the managers and department heads, as well as putting in place better technology with regard to trading execution to enhance client experience” explained Mr. Leahy.

“The technological focus is largely due to my having come from oneZero. FXPRIMUS has had a oneZero hub for a number of years, but was only using around 5% of capabilities, now we are up to 75% of the capabilities. I’d love to make even more use of it because its a great tool.”

“Good technology is important, but its potential must be maximized” he said. “If you can use Excel really well you can send a rocket to outer space. The reality is that most entities only use part of the capabilities of any system.”

CFDs are very much part of the future

With regard to any infrastructural changes that were made when Mr. Leahy became Chief Operating Officer, he explained that product rationalization and keeping pace with the need for good quality liquidity providers was high on the agenda.

“We didnt replace all of the existing liquidity providers, but we added new ones. I spoke to some of the existing liquidity provieders and explained that the current status quo may not work anymore with the prices that we are being given.”

Mr. Leahy then moved toward speaking about the need for an improved CFD offering. “We getting a lot of requests for single stock CFDs, for example. It is very important to offer more asset classes than just FX, and in terms of total volume, CFDs are certainly growing.”

“To me, I am surprised that more legitimate money managers aren’t using CFDs. In the US, you need to own the underlying asset, but not all jurisdictions need that. If you don’t need that qualifier, then a CFD is a great option because the financing fees are very favorable and there are arbitrage opportunities; You can trade Rio Tinto on a London exchange, currency on an overseas exchange and arb them” – Stephen Leahy, COO, FXPRIMUS

“To help make internal processes better, I may make some further internally visible projects, as we need to ensure that products are very saleable.

“Our marketing team have done a very good job with the branding, and as we start going into 2016, we have already started to focus on the direct consumer and basic client acquisition marketing” he enthused.

“I am taking some refresher courses about marketing becuase I last marketed B2C when I was at Back Bay FX, therefore it is very important that I am aligned with today’s customer.”

The Guy With The Bow Tie – The modern and urbane way to broadcast on TV

Mr. Leahy elaborated on the new TV studio which is being currently built at FXPRIMUS’ office in Cyprus, featuring Marshall Gittler, the world renowned ‘guy with the bow tie.’

We brought Marshall on board because he has great brand awareness and following especially in Asia. His analysis and marketing data is excellent and he has presence on Bloomberg and CNBC which remains. I believe that short burst videos will be the ethos of the future. Give me 15 to 90 seconds, and I will watch it. I think it is no good doing 7 minute videos.”

“Between Marshall who is our research analyst and New York-based Chief Dealer Dave Hannigan, our newly launched educational portal is going to be awesome. We needed to build a studio to accommodate Marshall. We will use BusinessWire to have the ability to put live video into any of the major stations it all gets funneled through this pipe” he explained.

“If Bloomberg says that they would like to talk to him, instead of flying, he can say ‘let’s flip the switch’ and we can be live in 2 minutes.”

“Our Chief Dealer David Hannigan who is based in New York is the markets expert and will handle all of the market commentary, whereas Marshall is the analytics and research expert.”

Let’s talk about emerging markets

“Interesting that you should mention that” said Mr. Leahy. “I emailed a couple of freinds from grad school and we met at an FX conference a couple of years ago in Chile. All of them told me that the problem in South America is that it is too reserved, and people there do not embrace retail FX, apart from Brazil.”

“They said that in Brazil, there is a celebratory culture, a lot of outgoing people wishing to do new things, and even casinos and so forth. Whilst this could be a big target market, it can be dangerous and difficult to get money out. I think it is a case of understanding different South American markets on merit.”

“Everyone is fighting for presence China, and this means there is less competition elsewhere. I cannot ignore China, but do I want to compete with the big firms with massive presence there like FXCM or Alpari? Not really.”

MT4 created a marketing war, and Scandinavia and Indonesia start to look at MT5

Mr. Leahy raised a very interesting point in that traditionally, at the outset of retail FX trading many companies had proprietary platforms and this by its own nature made customers stay.

“Nowadays, all companies are selling majors and using MT4, however as a result of that there is a need to differentiate, otherwise there is a severe difficulty in value proposition. It has become a marketing war. I learned when at Back Bay FX, that selling MT4 means that customers can go up and go elsewhere.”

“I firmly believe that as a brokerage you need the technology to be seperate from the liquidity provider. If they are one and the same, you have no visibility as to what happens behind the system. If the technology and liquidity provider are seperate entities, they act as checks and balances between each other.”

Mr. Leahy researched platform popularity, and drew an interesting conclusion. “I checked Google Analytics and it seems that traders in Scandinavian countries as well as in Indonesia are searching in Google for MT5. Until recently it has only been popular in Russia.”

Where next?

“South East Asia has always been a remains a strong point for us. We launched the Cyprus office in May to target European and Middle Eastern customers, however for our Asian customers, our original base in the Far East has a very strong footprint that remains until this day.”

Terry Thompson, our CEO has an office in Philadelphia about with around 10 staff, and I am here in suburban Boston.”

What’s it like?

New England is renowned for its high standard of living. Mr. Leahy explained that there is lots of snow in winter, and that he had to hire a plow to clear the driveway last year! “It’s a lovely place to live, the suburbs are known for providing a good life, and the whole area has good schools, right the way from elementary to university with MIT right on the doorstep here.”

In conclusion, Mr. Leahy looks ahead to the way that FX brokers will be run in the future. He says that “Whatever your marketing campaign is, there are two spearheads. You have to go direct to consumers, and support the introducing broker network. The big firms are acquiring specialist large companies to run their show.”

“This industry has around 5 years to go before this whole market will be consolidated. There will be 10 to 12 brokers left, and it will be all much more transparent.”