Launched in September of 2012, FastMatch was created to offer customers access to a large and transparent pool of diversified liquidity at high speed. However, FastMatch didn’t have a front end.
Most of its sell-side customers — banks, retail brokers, FX brokers and high frequency trading firms —use a Fix Protocol application-programming interface (API) to access the matching service. In the future, FastMatch will bring in the buy side. “They have their own front end or algorithms,” said Dmitri Galinov, CEO of FastMatch in an interview. Some sell-side firms don't have their own front ends. “But now we’ll give them Caplin as an alternative,” said Galinov.
The front end is currently in development and FastMatch plans to finish this month and then go into testing so it can make the front end available to clients in February.
As part of its value proposition, FastMatch receives liquidity from partners — FXCM, a large online retail broker and BNY Mellon whose foreign exchange traders are flowing orders into the ECN. Second, it offers more transparency than other ECNs because it displays all the trades in real time with prices and sizes, according to Galinov. “We have a tape,” added Galinov. And, the third piece is flexibility and fast technology, he said, noting that FastMatch is based on the technology underpinning Credit Suisse Crossfinder, the world’s largest equities crossing system, developed by Galinov and his team when he worked at Credit Suisse. “When it came to the front end we needed to implement an equally impressive solution,” said Galinov in the release.
Seeking a Tech Advantage
The front end is important because FastMatch competes against other forex ECNs including EBS, Reuters, Currenex, Integral, Hotspot, which have front ends. “We need to be at least on the same page,” said Galinov. “The advantage is that we have much better technology, because it’s newer [for] the matching engine vs. other platforms and now we have much newer technology on the front end as well,” said Galinov.
The partnership comes as FastMatch is gearing up to launch a third matching engine in Tokyo. FastMatch operate matching engines in New York and London data centers, and is currently preparing to launch a third one in Tokyo during Q1.
One of the main advantages to selecting Caplin is that it runs on HTML 5, a newer technology, which “is much faster and more flexible than other technology vendors,” said Galinov. “The second advantage is that we control the feature set that goes into different front ends rather than relying on a technology vendor,” said Galinov. “If we introduce new concepts for the FX market, such as midpoint trading, we can put it in very quickly into the front end because we control the technology,” he said. “When you control the technology you can very quickly deploy the enhancements,” said Galinov.
Caplin was founded in 1999 and has been building online trading platforms for banks such as such as Citi, RBS, Standard Bank and UniCredit. Prior to building in HTML 5, it was developing in Java and older versions of .Net.
In September 2013, Caplin introduced FX Motif, a ready-to-go FX platform in a box, which will be the core of the FastMatch solution. “Instead of an organization embarking on a six-to-12 month project, FX Motif comes with everything they pretty much need out of the box. That’s one of the things that attracted FastMatch. They could get up and running quickly within the space of six to eight weeks,” commented Richard Leader, Caplin’s EVP, Americas in the interview. According to the release, the FX web trading solution is customizable and reduces costs and time-to-market by up to 75 percent compared to alternative methods.
The deal with FastMatch also represents Caplin’s first entry into North America with front ends for non-bank trading platforms. The tech firm traditionally focused on banks and been doing single-dealer platforms, said Leader. “Banks have tended to have large IT departments and embark on projects that spend several millions of dollars on licenses.” Now Caplin is having more dialogue with non-bank financial institutions, electronic trading firms, wealth managers, and online brokers that are actively transitioning to HTML 5. “The crucial thing is online trading is pretty much online trading whether it’s a bank or an ECN. It’s all about putting buyers together with sellers,” he said.