The evolution of execution: smartTrade CEO David Vincent on LCG’s new liquidity methodology


The full-scale rejuvenation of London Capital Group Holdings plc (LON:LCG) from its flagging former self into an avantgarde, ultra-modern and prominent company among London’s urbane online trading companies has been interesting indeed thus far.

The latest step in the top-down restructuring of the company comes in the form of multi-asset vendor smartTrade Technologies which has entered into a very important strategic relationship with London Capital Group.

David Vincent smarttradeIn order to ascertain the rationale behind this, LeapRate spoke to David Vincent, CEO of smartTrade Technologies.

Describing the ethos behind his company, Mr. Vincent stated “The smartTrade LiquidityFX model is very disruptive. The costs are not volume based. We charge a flat fee and we don’t charge the liquidity providers. Our clients keep the direct relationships with the liquidity providers hence benefiting from a full transparency of the prices they receive.”

“smartTrade has a long history of being a multiasset vendor” explained Mr. Vincent. “We have packaged solutions that can be deployed in different locations, and as far as the FX industry is concerned, we have an all-encompassing connectivity solution”.

“In terms of providing solutions to large, multinational firms, it is important to rely on a strong solid technology” explained Mr. Vincent. “I want to consider the methodology behind the processing of all order execution. LiquidityFX was chosen for liquidity provision to the banks and ECNs, and its pricing capabilities.”

Mr. Vincent continued “The main reason why Charles-Henri Sabet chose smartTrade is due to our long term relationship, in fact more than 10 years with Synthesis Bank, then his fund business that he stopped when he joined London Capital Group. We successfully developed algorithmic strategies together and we provided connectivity to his business. The large number of connectors we have, which amounts to more than 70, are co-located in London, New York and Tokyo, to cater for international requirements.”

“Using our next generation Order Management System, our clients are able to monitor every type of order. We also feature sophisticated rules based Hedging Strategies, Post Trade connectivity and Distribution to clients.”

Mr. Vincent further explained that “We are the only vendor offering multi-asset aggregator and connectivity. Execution quality is of paramount importance in today’s latency-conscious environment. Co-location, and the possibility to extend on the same model to a multi asset approach is part of our remit” explained Mr. Vincent.

We have alot of products, alot of different market places, there is a need to have a vendor which has a new approach.

Capitalization

Mr. Vincent considers its capitalization model to be interesting for clients. He explained that smartTrade does not charge per volume and doesnt charge the liquidity provider. Instead, the firm operates as a service which aggregates liquidity management services. The price which is sent by the bank is what will arrive at the client, and smartTrade Technologies does not pay the liquidity providers, with the order flow pricing not being based on volume. Companies pay a fixed fee every month, rather than paying a cost per million.

Mr. Vincent is keen to make the distinction between firms that take on risk, and firms that are pure technology providers, himself confirming that smartTrade Technologies fits into the latter category.

“If you want a technological instrument, we allow the client to implement their own strategy, as we do not feature in the cost of execution. Insted we charge a monthly fee” stated Mr. Vincent.

“Volume based remuneration is killing the industry”

“My view is that volume based remuneration is killing the industry. Our model is that instead of operating as an institutional financial operator, we are a technology provider, we do not use information or take any order flow” asserted Mr. Vincent.

“To elaborate on that, the volume based model is not good for our industry as it significantly affects the operational margins of financial operators. Our recent success show that smartTrade’s value proposition is what the market is expecting and we are now pushing it in the fixed income market with smartFI, our new end to end Fixed Income trading platform. The multi asset capabilities of the smartTrade solutions are becoming a major asset for institutions wanting to expand in new markets.”

“We conduct most of our research and development in Aix en Provence in France, and we have further sales, client, technology and service offices in London, Tokyo, Singapore, New York, and Tunis. Global presence is fundamental. Some competitors are looking at just Europe, whereas we look globally. We are positioned in the South of France which is little California, therefore the technological resources are high quality. ”

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