oneZero at TradeTech FX USA 2022: Market data, last look, and what’s next

Rick Steves

Finance Feeds was at TradeTech FX USA 2022, which took place at the Eden Roc Resort in Miami.

The conference brought together the leading buy-side heads of FX and portfolio management in the return to face-to-face events since the pandemic began. 

Contrary to what would be expected out of a pandemic-ridden world economy, the FX industry didn’t slow down. Quite the opposite, in fact, and participants gathered in Miami to learn and discuss the news, innovation, and other pressing matters in the sector. 

FinanceFeeds Editor-in-Chief Nikolai Isayev had the chance to set up an interview with Phil Weisberg, EVP Strategic Planning and Partnerships at oneZero Financial Systems, the provider of multi-asset class trading technology to empower financial institutions and brokers to compete in today’s ever-changing global markets.

Phil Weisberg noted that a lot of the themes at the conference focus on automation, the better use of data and analytics, but they always end back to the underlying of the FX business: the relationship with customers and liquidity sources, as all this is about making everything as efficient as possible.

oneZero: Video game programmers fixing the FX industry 

oneZero is an interesting case among FX technology providers as its practical approach and thinking outside-the-box made the difference as it became one of the leading fintech firms within the FX industry. 

Weisberg explained how oneZero built customer relationships one at a time. “They saw what was in the industry. They thought it was inadequate and they worked in close partnership with customers one at a time to build excellent technology solutions”. 

“One of the keys to success is the core DNA of the company: essentially video game programmers who did not come from the financial industry. They had no preconceived notions about how the market ought to be structured, how technology works.”

He then pointed out that one of the real unique things about onezero is that software developers used to have to program video game machines like the Xbox. They are able to do things with less and pack a lot of analytics and processing into a relatively low hardware footprint. That results in cost savings for our customers”. 

Until a few years back, people at oneZero were focused exclusively on the retail industry, but the firm has now expanded its scope to include institutional participants. That is why oneZero has recently onboarded several ex-FXall/Refinitiv veteran executives to key positions in product development, design, and legal.

Working with the retail industry led the firm to develop the necessary capabilities to process more than one asset class and millions and millions of tickets, with all things automated.

“Those skill sets can be applied to the institutional FX market. In order to adapt to the system and communicate properly with clients, we wanted to increase some of the domain expertise about that type of the market but the core guts of our technology and operations team are the same.”

Integrating futures and cash equity market feeds, and OTC markets

Market data has become a key element in today’s FX industry, but the fragmentation embedded in multi asset trading is a challenge brokers face and oneZero addresses. 

“Our systems are capable of handling listed products – which are primarily driven on symbols and there is a finite number of symbols and very specific order and execution rules – with OTC markets, with an infinite variety of symbols and freedom in terms of market structure”, Weisberg explained. 

“We are capable of integrating futures and cash equity market feeds as well as the richness of OTC markets where you can’t really go to a central exchange and get a best bid and a best offer. It doesn’t exist”. 

“Being able to juxtapose the listed markets with the OTC markets is really helpful for our clients and essentially they can’t give their end users two systems. They need to track their position, P/L, margin, across all of it. 

Fundamentally, the clients that are choosing oneZero are the ones that need integration across asset classes. 

By the way, that is something that we see as a trend in institutional markets because futures is a substitute product for cash but if you have a system that only does cash, it doesn’t allow you to figure out what is the best way to mitigate your risk: futures or cash. 

Why the analytics tool on “last look” matters

Nikolai Isayev then asked about the recently launched analytics tool on “last look” at a time when the level of FX counterparties using the method has reportedly fallen since the introduction of the Global FX Code of Conduct.

Phil Weisberg started off by saying that last look is an attribute of a trading protocol, it can be used as a beneficial tool but can also be used in a problematic way. 

“Not all last look usage is negative but when you illuminate how it’s being used, you help ensure your clients who are using last look trading protocol are aware how much optionality they are giving to the LP in order to fill the order and you help them understand if they are a net beneficiary or not.

“If you give a wider last look window but you receive prices on larger amounts and the fill ratio goes up, that might be a net benefit”, he explained. 

“People were comparing two prices with different last look windows and they weren’t keeping track of what would happen if there was a reject. For our clients, we can keep track on their behalf automatically when they are rejected and what is the cost of that reject, theoretically. So, it isn’t enough to know you were rejected, you have to understand how did that cost and then you can compare the rejected outcomes with a firm liquidity protocol which inevitably will have wider prices. 

“So, when you look at both outcomes side by side, you can then make an adjustment in your aggregation system that will help adjust a last look price to a firm equivalent basis and by giving clients the ability to do that within they’re aggregator after they make data driven decisions they can more easily compare prices with last look and prices without last look.”

Market data vendors and integrating data with trading

oneZero has relationships with a number of market data redistributors, but it is up to the clients to purchase market data and have an arm’s length relationship with the data vendor. 

“We are not in the middle. They choose what is most suitable for them, then we integrate with that redistributor so that customer data flows within their trading hub. Depending on a customer’s need, that may influence what vendor is more suitable for them”, Weisberg said, as he pointed to a few recommended vendors. 

“Some people need a very broad set of data in which case Refinitiv may be a good choice. Sometimes people need alternative data sets, so we have integrations with others like QuantHouse. And then there are other market data vendors like ACTIV, who have very good price points and value propositions for the retail FX industry.”

The oneZero executive added that the firm also gives access to market makers as a prime of prime will often supply market data to customers. Clients must choose if they want to source data from the same entity or build their own liquidity function with data coming from the liquidity source and then they edge their CFDs with listed products.

As we approached the end of the interview, Phil Weisberg spoke about what’s in store for 2022 and beyond. In the case of oneZero, it is the challenge of integrating data analysis and trading. 

“In a lot of cases they are a seperate silo and it doesn’t lead to direct outcomes to the trading system. We’re looking at integrating those two together so that current market conditions can influence your trade routing and hedging decisions as the market moves  whether it’s a short term movement, episodic, or predictable around Non-Farm Payrolls.

“If you want to change your liquidity function over a high volatility setting, you need to know who does best in those circumstances, know when you’re in that circumstance, and toggle the liquidity regime. We are able to do that at oneZero”. 

The upcoming feature by oneZero sure does look promising. We at Finance Feeds will be there to cover the product launch. 

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