Below is a screen shot of the platform, taken from FX-MM. It’s really elegant, with a clear compact design.

According to Anil Prasad, Citi’s Global Head of Foreign Exchange, Velocity2.0 is designed for Citi’s wholesale and institutional clients, and will be available to 100,000 Citi clients.

It looks great, and is clearly packed with business functionality, and is capable of delivering deep liquidity, with minimal latency, on a truly massive scale.

CitiVelocity 2.0 (showing FX options strategies and analytics)
A definite winner!

The initial filing on page 28 here, stated with regard to the use of the proceeds that:

We intend to use the net proceeds from the sale of common stock by us in this offering for working capital and other general corporate purposes, including potential acquisitions

However, that same section in the revised filing on page 29 here , states simply:

We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders, including any shares sold by the selling stockholders in connection with the exercise of the underwriters’ option to purchase additional shares.

Could this mean that FXall bank shareholders, and initial equity backers are thinking of cashing in their chips?

Well interestingly, I asked just that question on 5th December following the release of FXall Q3 figures here, where I stated:

My view: Although, as previously mentioned,  we see single dealer platforms continuing as preferred channel through which buy-side firms access liquidity, whether provided by banks directly, or routed to SEFs where mandated. To date, 99% of FXall volume consists FX spot, fwds and swaps, all of which are exempt from SEF mandates.

Bank ownership: Under SEF rules, bank ownership is limited to under 25%, so will be interesting to see whether the current FXall bank shareholders each of which hold 5.1% (BNP, Citi, Credit Agricole, CS, Goldman, HSBC, MS, RBS – although the top three FX banks, Deutsche, UBS and BarCap are not shareholders in FXall) will cash in, or stay onboard to have a stronger influence on possible intermediation of their bank-client relationships, as mentioned here in could FXall become too big.

Surely FXall would have need of additional capital, for investment in newer technology,  to better serve clients in the face of greater regulatory oversight.

Of course, existing shareholders, could take the view, that that’s exactly why they are using the IPO as the ideal time to exit their investment, as I have previously asked, could FXall be getting too big, and now is the time to exit that play?

CitiVelocity 2.0 is stylish, compact, and looks great!

However, perhaps we don’t talk here enough about how important it is to help clients optimise the performance of their trading platform over the internet for very large numbers of end users, to ensure it’s always delivering added value.

Each client, faces a unique set of optimisation challenges, relating to the type of workflows being delivered, the number of concurrent users, their geographic location, as well as the number of instruments, and the speed of update, and the front end technology selected.

Architects need to work closely with the business, helping them optimise workflows, reducing message size, whilst ensuring internet latency is both minimised, and deterministic even for the most demanding of platforms, in the most hostile of internet terrains.

With that in mind, it’s interesting to see in today’s FX Week that Citi, whose Velocity 2.0 platform is built on Caplin’s technology, has just released their updated Velocity platform, and as Anil Prasad, Global Head of FX and Local Markets at Citi says:

“We think Velocity is faster than any other bank platform on the Street. The design will take care of five things – fast execution, lower transaction cost, more liquidity for our clients, real-time information and far more efficient use of desktop space. We think it’s going to revolutionise FX trading,”.

Anil goes on to say..…

The platform can accommodate 42 open tiles on a single screen and has the ability to update prices 92 milliseconds faster than previous versions, he said.

Optimisation is a continual process, and the ability to squeeze every millisecond of latency out of the platform, is critically important if banks are to maintain the quality and performance of service they offer to their clients.

Faced with Dodd Frank mandate for SEF execution of cleared products, bank single dealer platforms (SDPs) would provide SEF aggregation and smart order routing services that enable their buyside clients to access liquidity, whether from the bank, or from SEFs.

So, it’s nice  to see Tabb Group research now confirm our view.

Despite the fact that swaps execution facilities (SEFs) don’t technically exist yet and swaps market liquidity isn’t fragmented today:

Swaps dealers tell TABB Group in a new research report that they intend to spend millions to create, implement and market swaps liquidity aggregation systems to their buy-side client base.

Kevin McPartland, from Tabb has just published a research report on this topic, extract here:

Executive Summary
Swaps liquidity is going to fragment. History tells us that a combination of available technology and catalyzing regulation, both of which now exist in the swaps market, creates an environment in which liquidity fragmentation across multiple electronic trading platforms is nearly inevitable. Regulatory reform will impact how this fragmentation takes place, but they will not prevent its coming.

This fragmentation presents an opportunity for dealers at risk of being disinter mediated by Dodd-Frank-inspired regulations, and technology companies that have had little opportunity in the overly manual swaps market. Aggregating liquidity via smart technology is common in other markets such as equities and FX; providers of such tools hope to make a splash with SEF aggregators using lessons they’ve learned from the past. Their enthusiasm is warranted, but creating SEF aggregators and advanced smart order routers for the swaps market is considerably more complex than it is for those other markets.

Full report on sale here

The report highlights both the primary impact of the tax – increased transaction costs, relocation of trading and reduction in nominal turnover, but also looks at the secondary impact – reduction in liquidity, leading to widening of bid/ask spreads:

• Directly increase transaction costs by 3-7 times, and up to 18 times for most actively traded segments
• Potential relocation of 70-75% of tax eligible transactions outside the EU
• Real economy hit most: Pension funds, Asset managers insurers and corporates
• Limited impact on speculative (leveraged money), which could/would relocate outside EU
• The combination of primary and secondary impacts would result in marginal FTT of over 100%

Under the proposals, the FTT would be levied at a rate of 0.1% on all transactions between institutions when at least one party is based in the EU. Derivative contracts would be taxed at a rate of 0.01%.

Proposed FX products impacted and pct of daily FX volumes according to latest Bank of England FX survey data
OTC FX cash (fwds and swaps) ($1,082bln – 49%)
OTC FX derivatives (options) ($139bln – 6%)
Listed FX futures & options
FX spot has been exempted ($919bln – 42%)

Full report here

In one case the bank had already built a substantial list of requirements. We began our engagement, as we always do, with UX research – and the team not only indentified a bunch of end-user requirements that were about the way *they* preferred the interaction but also recommended several unique pieces of functionality which the end-users would really value – likely to make the resulting single-dealer platform (1) unique for the bank, (2) more useful and therefore (3) more likely to retain the bank’s customers.

Not only that, but by building a design for the user interaction before starting to write code, the whole development process was massively accelerated.

Only a handful of years ago few people had heard of user experience design, today it’s become the essential first step in building a new web trading application. Putting the users’ needs first – now that IS a revolution.

Many of those reasons are as old as the hills; to have a salesforce speaking one-language, to distribute research, andh to share complex trade ideas with analytical support to back them up.

Live executable prices are a relatively new part of the jigsaw.  The justification for single-dealer builds has always been a portfolio of different interests which has led to much of the difficulty of getting these efforts to market.

And whilst some of the new regulations detract from the desire for single-dealer trading platforms a few new trends actually enhance the need for them.

Two that spring to mind are:

  1. The complexities and speed of movement around OTC derivatives and being able to inform a client of the full economic consequences of the next trade given all considerations like margin, collateral, clearing fees, cross product margin offset or not, etc etc – all at point of sale before a trade is “closed/clicked”.  No easy task and one made much more complicated if needing to operate through third party networks restricted in terms of the number and amount of data they can stream in realtime.

2. Best expressed by the views of an equity colleague commenting on the introduction of MIFID1 – where they didn’t understand the opportunitiesthat lay before them to adhere to the letter of the rules whilst still being able to service business flows that in time migrated to official “dark pools” but when such official dark pools didn’t yet exists in any size or scale.  So those firms that were able to “seize the moment” were those who had their own capability because:

(a) they had the capability and

(b) because they’d organised the necessary flexibility in surrounding systems of which an external single dealer client offering is but the tip of a very large system, process and human endeavour…

An endeavour best started months before the need is upon you or is indeed clear from regulations! I hope that contributes to the debate.

Luckily, there’s one thing that’s pretty certain. In 2012, HTML5 will become the world’s favourite GUI technology, and in particular the No. 1 choice for building online trading applications.

Yesterday I started writing a post on why this now seems so inevitable. But a few hundred words in, I realised that there was so much to say on the subject − so many sources to quote, so many trends to map, so many statistics to analyse − that it was way more than a blog-sized chunk.

So I am re-casting the article as a white paper, which we’ll release within the next two weeks. Keep your eye on this site, and I’ll post an announcement as soon as it’s ready for you to download.

IE6 was the most widely used web browser during its tenure, surpassing Internet Explorer 5.x. In 2002 and 2003, IE6 had a total market share of nearly 90%. Widely reported to be plagued with security problems, there have been for some time widespread frustrations from those in IT who have to support it. In 2010, a Downing Street petition called for the UK government to stop using IE6 and to upgrade to a newer browser.

These days, Microsoft is celebrating the demise of IE6 (with cake!) By December 2011 (as shown by the Internet Explorer Countdown page) IE6 was used by less than 1% of US internet surfers.

HTML5 shares the cake

While developers will join Microsoft in celebrating the demise of IE6 and an end to the days of supporting the outdated browser, the announcement (as the cake clearly shows) is as much a celebration of HTML5 and the drive to use HTML5-compliant browsers such as IE9 (as well as the increasingly popular Chrome).

Single-dealer platforms & HTML5

The demise of outdated browser technology such as IE6 and the rise of HTML5 has not gone unnoticed by banks who are now looking upon HTML5 as their strategic Web app technology for building single-dealer platforms.

For more information on HTML5 and single-dealer platforms, read Paul Caplin’s The HTML5 Juggernaut.