LeapRate Exclusive: Integral FX platform and the new Mint Exchange: Harpal Sandhu speaks

LeapRate Exclusive: Integral FX platform and the new Mint Exchange: Harpal Sandhu speaks

Mint Exchange is the world’s first crypto clearinghouse, providing access to all major exchanges, brokers, and market makers through a single account. It is built on the Integral FX platform, founded by Harpal Sandhu back in 1993. Harpal wanted to combine technology and finance for the benefit of end-users. Leading the way with the first ever Internet based derivatives pricing and risk management system in 1997, Integral has pioneered the use of advanced technology to deliver increased transparency, best execution and operational efficiency to banks, brokers and asset managers around the world.

In 2018 Integral invested in Mint Exchange, a cryptocurrency clearinghouse designed for institutions. Mint Exchange is built on the Integral platform which gave it a significant competitive advantage in the evolving world of cryptocurrency.

Harpal began his career as a financial engineer in the Capital Markets Product Development Group at Morgan Stanley & Company. Harpal holds a BA from Stanford University and is the author of 5 patents on the use of innovative technology in capital markets.

Harpal joins LeapRate today to let us know more about Mint Exchange and Integral.

LR: Hi Harpal and thank you for joining LeapRate today. Can you let our readers know a bit more about Mint Exchange and the people behind it?

Harpal: We started the Mint Exchange project in September 2017. We launched the product one year later, in September 2018 and we’ve been running ever since with the live system. Mint Exchange is a full cryptocurrency exchange for FX brokers. It is specifically designed for the major FX brokers who are trading crypto and crypto CFDs with their customers and need to hedge those crypto positions.

Given the rapid rise in crypto trading in 2017 amongst Integral’s FX broker customers, the company decided to extend its service offering to include cryptocurrencies. Integral founded Mint Exchange as a separate independently capitalized regulated entity to provide institutional level services to its customers.

Mint Exchange:

  • Aggregates the liquidity from all of the sources around the crypto market and that includes exchanges, market makers, and the other brokers themselves (all three sources of liquidity into a single liquidity pool)
  • Provides custody service to the brokers, so the brokers can open a single account with Mint Exchange and trade against the whole market.

We call it an exchange, because that’s the name that’s used in the crypto market, but it really is more than that – it’s an inter-broker utility service, an exchange, a clearinghouse, and a custody agent.

We have a long list of customers who we are on-boarding throughout the year.

LR: What do you think will happen to the retail market this year? After all the ESMA and other regulators restrictions.

Harpal: Many of ESMA’s decisions really have to do with leverage, particularly in the CFD market. There’s no doubt that the decrease in leverage initially always leads to a decrease in volume, because it decreases the volatility for the customer. That is a typical cycle that has happened many times before. It’s not a new thing for regulators to decrease leverage.

I think the more interesting case to look at is what happened in the more advanced markets; markets that are more mature, like Japan. In that case the leverage was decreased about 7 years ago, and initially there was a decrease in volume. But, within a few years, the more sophisticated, more technologically advanced brokers were able to improve their technology and risk management systems by working with external technology providers such as Integral. As a result, they were able to reduce their spreads and significantly increase their customer volumes to levels higher than prior to the regulatory changes. Today Japan represents almost 50% of the worldwide FX market and it does so because the FX brokers in Japan are very sophisticated. So, I think after this decrease in leverage in Europe, you will see the weak FX brokers will leave the market and the advanced ones become very sophisticated and significantly larger.  I think the volumes will return to previous levels, but with much tighter spreads and lower leverage.

LR: Let’s talk about the Integral FX platform a bit. Can you tell us more about it?

Harpal: Integral is the leading platform for brokers to use:

  • First level: to hedge their FX exposure;
  • Next level: to manage their risk of their FX exposures; to warehouse their risk;
  • Edge level: to integrate with their customer-facing front-end systems, whether that’s MT4, MT5, or proprietary systems.

Integral has significantly upgraded our technology in the past year so firms can use any of the services that Integral offers alongside products from other companies and their own internal technology.

Another big change is that Integral’s technology is available on a fixed monthly subscription basis. Brokers now pay a flat fixed monthly charge; zero brokerage, zero per-volume fee. They can now operate their entire workflow from Integral’s main data centres in New York, London, or Tokyo for a fixed fee.

As the leading, most robust platform, we are seeing quite a lot of interest in firms wanting to use the Integral system as their primary platform and to no longer invest so much in building their own proprietary technology.

LR: How safe are Mint Exchange’s website and server?

Harpal: They are extremely safe because we run in Integral’s data centres. Integral operates the primary FX platforms of more than 200 banks and brokers around the world. Most banks conduct very sophisticated hacking simulations on Integral’s data centres on a regular basis to adhere to their own security requirements.

Integral systems, on a typical day, trade more than $40b in FX volume in its three data centres. It’s always been very important that we keep those systems secure, and Mint Exchange is able to take advantage of this existing security infrastructure.

LR: Does Cboe’s move indicate that crypto futures are doomed to fail?

Harpal: Two things… crypto started as a retail business and not as an institutional business. Crypto futures are specifically targeted at institutions. It’s not clear that the institutional market exists yet.

This is why, for example, Mint Exchange has as its primary customers retail brokers, because it’s the retail brokers who have access to the retail market. So that’s number one.

Number two… crypto is an OTC market – just like FX. There are many brokers in many parts of the world operating different types of businesses with different types of products; some are CFDs, some are cash. To think that you would bring an exchange product in to solve an OTC product need is just wrong.

What about Nasdaq?

Harpal: Nasdaq could be a successful market entrant, but they really haven’t entered the market yet. They have been licensing their matching engine to some crypto exchanges, but they haven’t actually offered their own products.

I think the traditional exchanges, generally, will have a very difficult time in crypto. Crypto is an OTC market and OTC platforms can service it best. FX platforms really are OTC platforms, that’s why FX platform players can move so quickly here. Mint Exchange chose to use Integral’s technology because Integral has the leading OTC technology platform.

In contrast to so many high profile entrants, like Bakkt, Mint Exchange is live and on-boarding customers at a rapid rate.

LR: How is the customer support?

Harpal: Mint Exchange delivers institutional level customer support, 24/7 for trading and custody services. We have real people answering the phone in support centres in California, London, Singapore, and Tokyo.

LR: Why should people use Mint Exchange?

Harpal: Because it has the best liquidity, the highest service level, the lowest cost, and it is the most reliable cryptocurrency exchange in the world today. It is designed specifically for institutions by an institutional technology provider, who understands their needs and delivers the service level that they expect. The system is live and growing quickly.

LR: What can we expect to see from Mint Exchange going forward in 2019?

Harpal: The Mint Exchange platform will continue to grow. We will expand the number of cryptocurrencies and additional digital assets. We will offer lending and additional risk management services. We aim to make our broker customer more competitive by allowing them to offer more products at lower prices and less risk.

Read Also: