On Thursday 16th September, more than twenty London-based FX industry specialists attended a breakfast briefing, to learn more about CMC Markets Connect and its recently launched Spot FX products.
Following an introduction by CEO and founder Lord Peter Cruddas, key members of CMC Markets staff discussed how the company was working to fill the FX liquidity gap which has emerged in recent years. With structural changes unfolding in the market, this has resulted in some participants struggling to find access to high quality, reliable liquidity streams, which has at the same time presented an opportunity for innovators like CMC Markets. With significant volumes of retail flow, an extensive range of liquidity partners and state of the art technology, the company was well positioned to rise to this challenge.
To that extent, at the start of 2021 CMC Markets Connect was launched as the new institutional brand - but the company’s broker to broker legacy is far bigger than this. Having been founded back in 1989, CMC onboarded its first institutional client in 1996 and in 2015 became a liquidity provider for CFDs across multiple asset classes. Since then, more than 160 clients have connected into this liquidity, whilst owing to client demand and the company’s ongoing investment in technology, spot prices for 63 FX pairs and precious metals have now been re-introduced to the offering after a decade long hiatus.
The institutional market does require a more nuanced approach and critically latency needs to be driven down. Historically only part of the transaction took place in the LD4 data centre but optimisation means this now accommodates the entire process, shaving valuable microseconds from each trade. Elements of the technology stack have also been upgraded, so by using the latest in artificial intelligence and machine learning from tech partner Quod Financial, existing strategies have been truly optimised.
Key points made during the session included Richard Elston, Head of Institutional at CMC Markets Connect, noting that the latency improvements undertaken meant that the firm’s technology could execute trades significantly faster than many of the bigger organisations who were often running on systems that hadn’t been materially updated in a decade.
CMC Markets’ Algorithmic Quant Trading Manager, Artur Delijergijevs was also keen to impress on the audience that it is the proprietary software that makes the real difference when it comes to performance. It’s this IP that contains the real value, as anyone can go out and buy the necessary hardware, but running it optimally is the difference between success and failure when you’re working in such a fast-paced environment.
The discussion also highlighted CMC Markets heavy investment into Transaction Cost Analysis. This is something that facilitates open, transparent, and data-driven conversations with hedging partners, the outcome of which is invariably a better-quality service.
Critically, CMC Markets Connect is in a rarefied position to fill that mid-market liquidity gap where counterparties are unable to get direct access to a Prime Broker. And unlike a Prime of Prime broker, CMC Markets isn’ t simply recycling the liquidity of others, but is instead constructing its own price ladder and corresponding depth on its own terms. Even if you have access to a PB, CMC Markets offers a sound liquidity proposition and if there’s one point that cannot be made clearly enough it’s that the firm today is much more than just another retail broker.
