LeapRate Exclusive Interview… One thing seems certain nowadays – the advent of blockchain and cryptocurrencies is going to change the world of finance in general, and the FX trading industry in particular. How that will happen, however, isn’t quite as clear.
One group which seems to have a vision is 180 Capital, which is launching a “new generation” trading platform called Non-Zero, looking to break the zero-sum bias in FX trading. We’re pleased to speak today with Non-Zero’s CEO Hadi Kabalan on what exactly Non-Zero is, how it sees its mission, and what the future might hold.
LR: Hi Hadi, and thanks for joining us today. Please let us know a little more about the decision within 180 Capital to set up Non-Zero.
Hadi: Non-Zero is independent of the 180 Capital group and Amana Capital. Though the companies have common shareholders they are managed independently and have separate boards and governance. Non-Zero’s success is driven by the industry and is a community platform.
The creation on Non-Zero as an industry platform comes from the depth of experience of the founders of close to 15 years in the online brokerage industry, and is intended to re-invigorate the industry onto a higher growth trajectory for everyone, and at the same time upgrade the experience of the clients and the interaction between client and broker.
LR: Can you please explain to our readers what an ERC-20 based Ethereum token is, and how it will be used by Non-Zero to increase transparency in the broker-client business relationship.
Hadi: Where the internet allows you to send information, blockchain allows you to send value, with minimal cost and without intermediaries. ERC20 is just a standardised approach to representing tokens in blockchain platform running on top of Ethereum, which is probably best described as a distributed computer.
Brokers and traders will be able to see in a pseudonymous way (numbers not names) who are the owners of Non-Zero NZO tokens and how they are being distributed and used. Such transparency can provide accountability, without infringing on privacy.
LR: Please explain to us your views on the STP versus Market Making (or A-book versus B-book) model of Forex brokerage.
Hadi: Brokers who are using the A-book model typically enjoy higher levels of trust from clients. This is due to the fact that they are eliminating conflicts of interest by sending their order flow to a liquidity provider. B-booking brokers are internalising trades and book income when their clients lose. What we are aiming to do with Non-Zero is to eliminate any conflict of interest for B-booking brokers.
We’re really trying to provide clients with the best of both worlds, which is the speed of execution and depth of volume of dealing-desk brokers, with the alignment of interest perceived for STP execution brokers.
LR: How will Non-Zero approach this issue?
Hadi: Brokers will have the ability to share warehousing gains with eligible clients, with parameters set by the brokers, in order to drive client loyalty. We intend that what flows from that are a number of positive impacts, including higher client lifetime value and lower client cost of client acquisition, as well as potentially greater market share gains and market repair of the industry. Overall, we’d like to see the whole industry regain its high growth trajectory. Use of the Non-Zero token distribution mechanism is largely driven by the success of the brokers, as a broker which does not have warehousing gains is not able to purchase tokens to distribute to clients.
LR: What else can we expect to hear from Non-Zero in the coming months?
Hadi: We are working hard to build our network of partnerships and exchanges. The ecosystem’s success hinges on the Non-Zero platform to continually provide a source of value to brokers and their clients. We will be hopefully announcing more partnerships with brokers and exchanges, and building the toolsets for all platform participants to continue innovating and providing an attractive ecosystem to existing and new participants.
We want to be able to equip brokers with a toolset that allows them to be creative in how they interact with their clients through the platform, as well as to get more participants onto the platform, from across the financial and adjacent industries.