Awards: Fluent Trade Technologies

A few years ago, large global banks would have built all of their technology in-house. Third-party vendors were for smaller, less dominant dealers in foreign exchange, while the top players prided themselves on developing new products and services internally. But times have changed. Resources at large banks are under pressure due to regulatory changes, while the reputational blow to the banking sector spurred many employees to carve out niches outside these institutions.

Gil Neihous, founder and chief executive of Fluent Trade Technologies, says a key development in the last year has been a change in attitude towards non-core elements of trading technology, as banks move to focus on their unique differentiators rather than commoditised elements of the trading stack.

“We think it’s so encouraging for long-term market evolution that unique partnerships are forming between small, fintech-type companies and large global banks. These smaller firms, like Fluent, some of which are start-ups, are driving significant changes in the market structure and disrupting traditional FX infrastructure,” says Neihous.

Fluent Trade Technologies has been voted the winner of the Best FX Connectivity Provider of the Year and the Best FX Trading Technology Provider of the Year categories at the 2018 FX Week e-FX Awards.

Fluent does not see connectivity, risk and price distribution as separate components; the beauty is that we combine them into one product

Gil Neihous, Fluent Trade Technologies

The commoditisation of processes such as connectivity is driven by a pressure on resources as much as the realisation that specialised, third-party vendors can manage these essential, but non-differentiating trading steps. But, for this to happen, trust between dealer and provider is essential.

“Our rapidly growing buy-side, sell-side and prime broker client list now includes six or seven of the top 15 FX banks who use Fluent’s solutions for its next-generation technology. In doing so, these banks are replacing key elements of their existing technology stack,” says David Faulkner, a managing director at Fluent.

The firm started to gain a foothold with big banks with its connectivity offering, working in partnerships with dealers and clients. After building up trust, many customers moved to take up other products offered by Fluent – pre-trade risk controls, as well as price creation and distribution.

Lights-on components

“Our clients see that improving their core ‘lights-on’ components – like connectivity, distribution and pre-trade risk management tools – translates into better pricing to their clients, lower slippage and reducing the trade end-to-end cycle times,” says Neihous. “Fluent does not see connectivity, risk and price distribution as separate components; the beauty is that we combine them into one product.”

In terms of connectivity, low-latency and reliability are key factors, while pre-trade risk controls help prime brokers to use their balance sheets more efficiently, as well as giving them more control over their customers’ activity and their available credit limits.

The distribution system, meanwhile, lets traders feed market data into the price engine and then send prices to clients on a low-latency distribution system.

“Fluent has grown as a result of top-tier FX players demanding quality ultra-low latency connectivity to multiple sources of data, as well as liquidity and the fastest distribution tools for that data and pricing. This is not a simple process. Larger participants have multiple connections and many legacy systems,” says Faulkner.

“To achieve this, Fluent works in true partnership with its clients – to define, build, test, refine, launch and then continuously fine-tune on an ongoing basis. In addition, Fluent’s revolutionary pre-trade risk management controls are setting new market standards,” he adds.

Scaling up

From a market data perspective, the main challenge is the ability to scale up, as more market data is being pumped out by trading venues and at a faster rate than ever. One of the issues with more data is the strain it puts on infrastructures designed to process, analyse and filter the feeds according to user needs.

“We are able to customise and pre-filter the distributing data for each algorithm to help monetisation of information,” says Neihous.

Data-processing times are also reduced, which provides greater control over decision-making. But great technology is no use if service levels dip, especially as Fluent aims to continue its efforts to commoditise the more complex technological elements of trading. The company already supports FX and futures, and it is in the process of adding fixed income.

“Our good name and reputation is driving our expansion,” says Neihous. “Just a few years ago, Fluent was a best-kept secret. Now, Fluent’s name is on everybody’s shortlist. Our good reputation has been spreading by word of mouth, based on our successful installations in production.”

VIEW THE LIST OF WINNERS