The FCA sandbox – a question of fair play at the heart of UK Fintech

Play is about being inquisitive. It is about trial and error. It is how we learn and improve. A world without play is a world without growth.

That is the insight at the heart of the FCA’s sandbox, and it is a fundamental reason the UK is at the heart of global fintech.

Other regulators have not taken such an enlightened approach. Last week French and German regulators threw their toys out of the pram claiming that FCA’s sandbox is anticompetitive.

They claimed that the FCA’s approach – which allows certain companies to test their technologies with real customers before getting full regulatory approval and within an environment which is more forgiving from a regulation perspective – is unfair to large established players.

This is not the first time foreign regulators have criticised the sandbox approach. In August, NYFDS’s Maria T. Vullo, rejected the idea of the NYFDS setting one up saying that only ‘toddlers play in sandboxes. Adults play by the rules.’

It is true that companies which are admitted to the sandbox get an advantage. They are not subject to the same strictures as a large bank would be when developing a new service. That does allow them to be more agile and test their services in real-world environments – an invaluable opportunity for developers of emerging technology.

That said, there is a strong argument to make that, far from being anti-competitive, the sandbox is actually helping to level the field between fintechs and the banks.

Regulatory approval is a long, protracted and extremely costly process. There are no guarantees. There is always the risk that the regulator won’t give the final go ahead, leaving a firm with significant legal costs, wasted time and nothing much to show for it.

Banks are in constant communication with the regulators. They can also hire armies of specialists to give themselves the best chance of getting their services approved. Many fintechs have neither of these advantages. The sandbox gives them a chance to work with the regulator in a more collaborative environment to find solutions to any regulatory challenges within the technology design and allow the fintech to change course if their current design causes the regulator too much concern.

In doing this, the sandbox helps reduce the costs of regulation for the companies which can least afford it, boosting – not stifling – competition.

Not only is the sandbox good for fintechs, but it is also good for the regulator, consumers and even the large banks themselves.

For the regulators, it is a chance to develop a deeper understanding of the latest technologies, such as blockchain and machine learning, by collaborating with their creators. This can help lead to more sophisticated regulation and help the FCA ensure it is keeping pace with technological change.

One of the core stipulations of the sandbox is the protection of consumers. This is something the FCA has emphasised time and again when talking about the sandbox. By taking this approach, it is allowing consumers to access new services years before they would otherwise be available while ensuring they still enjoy a high level of protection from the FCA.

Finally, a little healthy competition is good for banks. Change is not easy and, without dynamic, agile and hungry competition snapping at their heals, there is little real incentive for banks or infrastructure providers to make the much-needed upgrades to their systems and services.

There are many fintech ’specialists’ out there talking about how banks are going to be ‘disrupted’ out of existence by fintech ‘challengers’. The reality of the market is that most successful fintechs are forming partnerships with banks to the benefit of both parties.

Fintechs need the banks, which hold sticky client relationships and huge institutional expertise, while the banks benefit hugely from the innovation and efficiencies which fintechs can bring.

Sandboxes are an excellent way to nurture the next generation of partners, vendors and acquisition targets for banks – not their nemesis.

The UK remains the best place to start and grow a fintech. The FCA’s sandbox is a meaningful part of the reason why, long may it continue.

FX activity boosted by EM sell-off – August Spot FX Volumes

As the summer lull comes to a close, it has become apparent that there was no ‘sleepy summer’ for spot FX traders this year. Data from ECNs that publicly report their volumes has revealed that trading activity was largely up across the board in August.

NEX reported a 3% increase in spot FX trading activity as its volumes increased from $81.9 billion in July to $83 billion in August. Year-on-year volumes saw a slight increase of 2%.

Thomson Reuters’ spot FX volumes remained flat at $94 billion, but August’s trading activity represents a 14.7% increase when compared to the same period in 2017.

Cboe FX’s spot volumes rose by 3.9% from July to $34.5 billion. Year-on-year growth was an impressive 27.3%. The venue has now had 12 months during which ADV has been in excess of $30 billion per day.

Spot FX volumes on Fastmatch fell by around 2.5% from $20 billion in July to $19.5 billion in August. This follows a 9% decrease the previous month. However, year-on-year comparisons show an increase of 20%. Although it didn’t see an increase in ADV, its FX Tape saw a record amount of activity, averaging $83.6 billion a day in August.

FXSpotStream reported an ADV of $28.4 billion, up 2.5% from July and up a whopping 47.6% from August 2017.

CLS reported a 2.2% increase in August’s ADV to $425 billion. However, this is down 1.9% for the same period last year.

Spot FX*All figures in US$


Insight

After a very slow start to the summer trading season in July, data shows that most platforms experienced a slight recovery in spot FX volumes in August.

Despite the seasonal decline, trading activity in the market was stable, aided by volatility in emerging markets.

Once again, political events have played a major role in volatility. After the Turkish central bank lost its independence, the lira went into freefall.

The Argentinean peso was another currency in the crosshairs of currency traders. At the tail end of August, the central bank ratcheted up interest rates to a whopping 60%. Despite this drastic action, the currency continued to plunge 12%.

The Russian ruble experienced its worst month since April against the dollar, on the back of US announcements to introduce new sanctions against Russia

The decline in these currencies helped trigger a broader sell-off in the developing world’s markets, with JPMorgan’s emerging market currency gauge sliding 1% at one point to a new record low.


Future predictions

Industry insiders think that what happened in August is a sign of things to come over the next few months.

Political factors are continually weighing on currency movements. With prospective rate hikes from the US Federal Reserve coming into play before the end of the year and Trump’s Twitter account continuing to wreak havoc, many expect volatility to continue.

Some predict that the lack of stability and transparency in Turkey will drive more business away from the lira to ‘safe-haven’ currencies.

Closer to home, Brexit negotiations remain the topic of focus. There seems to be no end to near-term uncertainty; in fact, a Reuters poll predicts a no-deal Brexit could see GBP fall as much as 8%!

Cobalt appoints Darren Coote as Managing Director

Cobalt, the foreign exchange (FX) post-trade processing network based on shared infrastructure and high-performance technology, has appointed FX industry veteran Darren Coote as managing director.

Darren has been working with Cobalt since the end of 2017 as a strategic advisor and will now take on responsibility for the day to day management of the company. This comes at a key time for Cobalt as the company launches and looks to significantly scale its business.

Darren brings over 25 years’ experience in FX to Cobalt, having held a number of high profile roles running global FX trading and e-FX businesses at UBS where he drove the business through significant industry and technology change. He has also worked for Lloyds, served on a number of FX boards and committees including the Bank of England’s FX Joint Standing Committee and EBS’s executive board prior to the company’s sale to ICAP in 2006.

Adrian Patten, Co-Founder, and Chairman of Cobalt, commented: “We are very pleased to welcome Darren to our fast-growing team. He brings invaluable expertise and market contacts. We are confident he is the right person to lead Cobalt as we prepare to go into full production later this year.”

Darren Coote said: “Having worked in FX for over 25 years, I have seen first-hand the negative impact that aging, inefficient legacy technology is having on market participants and their bottom line. As the industry gets increasingly competitive and margins shrink, it’s important for institutions to save money and mitigate risk wherever possible.

“Cobalt is a unique solution which solves an urgent need for participants by creating a shared FX post-trade back office utility, significantly reducing risk and cost by 80%. I’m excited to play a key role in Cobalt’s development as we prepare to go live this year and re-engineer the FX market from the ground up.”

This May, Cobalt secured a strategic investment from Singapore Exchange (SGX), which operates Asia’s largest, most diverse and fastest growing FX exchange.

R3 Ledger

The Corda development community continues to build awesome new CorDapps harnessing the best of Corda. Do check out the latest addition, Parnika Sharma’s (BCS Tech) property listing CorDapp which showcases the power of an RDBMS running on a distributed ledger. We’ll be adding this to the growing list of Corda samples soon.

Meanwhile Corda 4 and Corda Enterprise 4 is taking shape, and a sneak peek at the content reveals a host of compelling new features and further improvements to the developer experience: contract constraints are a part of how Corda manages application upgrades and we’re adding the ability to constrain to any attachments signed by a specified set of cryptographic keys. 

This is an easier constraint method to use and requires less choreography between node administrators; support for multiple Corda nodes behind a single firewall, part of the strategy to reduce hosting costs; hardware security module support for safeguarding node cryptographic keys; a more consistent developer experience across the code (for example, error logging and the command line interface); improvements to the administration of a node’s membership to a Corda network, and – of course – we will be maintaining our high bar for the standard of documentation with further improvements to make it better than ever.


Bootcamp

Image result for corda bootcamp

R3’s Corda developer relations team is back on the road! Building on their massively successfully Bootcamp events held in major cities around the world earlier in the year, the team will be stopping off in more global locations in October to help you learn more about (and get the most out of) Corda.  Do take a look at the list of Bootcamps in the Upcoming Events section below to register for your nearest city and join our Corda experts for a no-cost evening of hands-on training, where any developer can arrive with their laptop and leave with a CordDapp.


Partner Spotlight

Corda

 Corda Enterprise Blockchain is now available on AWS! This Quick Start automatically deploys a Corda Enterprise node in a new or existing virtual private cloud (VPC) on the AWS Cloud in about 30 minutes. Corda Enterprise on AWS is a production-ready implementation of a Corda Enterprise node, which offers built-in resilience and high availability and which can scale as the needs of the node operator change. This partnership opens up CE availability to AWS’ 55,000+ partner network. Read all about it here.


R3search Rollout

Corda

In energy, R3 responded to the US Senate hearing regarding the energy efficiency of blockchain technology. The article in Brink, “Bitcoin is a Red Herring in the Discussion of Blockchain Energy Efficiency”, found that blockchain could aid the integration of smaller suppliers into the energy grid and enable provenance tracking of renewables.

We now have 18 public papers available for download, written by authors such as Vitalik Buterin, Ian Grigg, JP Koning, Rodney Garratt, Neepa Patel, and many other blockchain thought leaders! In capital markets, R3 Research has privately published “Building Blocks for Better Compliance: Can Blockchain Decrease the Burden of Financial Regulations?”, which focuses specifically on the recent MiFid II regulation in Europe. Members can access private papers here.


Life in the Fast Chain

Corda

Have you listened to our blockchain podcast yet? Check out our latest episode (online, iTunes, Spotify, Google Play, Overcast, etc) with Impact Chain Lab’s CEO and co-founder, Aishwarya Balaji. Aishwarya comes on to discuss how she got into the blockchain space, her company’s goals, their new project Bystander, and more.

If you haven’t listened to our last special, check it out! This special episode features R3’s Mike Hearn who talks about the Corda platform, the Corda network, his vision for the future of Corda and the potential future intersection of the blockchain, IoT, AI, and other emerging technologies.

To stay tuned, be sure to check out the podcast on your favorite app! 


Corda Certification

Corda

Certification can be obtained by passing the Corda Certification exam with a score of 75% or better. If you have attended a Corda developer training session or have equivalent experience, you should be well-equipped to take the exam with some additional independent study.

Developers who pass will receive an invitation to claim a digital badge that can be shared on social media and with the developer community at large.

Ready to take the exam?

Previse and Cobalt named amongst Top 101 Fintech Disruptors

BusinessCloud has revealed its list of the top 101 fintech disrupters in the UK, and it made for pleasant reading at Chatsworth Towers.

The award recognises companies that are disrupting the industry through technology – whether they are heavyweight incumbents to start-ups. BusinessCloud also canvassed the opinion of industry experts before they settled on the final line-up, and we’re delighted that two of our clients made the list.

One of those is Previse, a startup that applies machine learning technology to solve a global business problem – slow B2B payments. The London-based fintech enables buyers to have all their suppliers paid instantly, as soon as the buyer receives an invoice. It uses machine learning to root out the invoices which may not be paid, allowing a funder to pay the rest immediately.

Previse has made huge strides since its launch in 2016, recently raising £7 million in Series A funding. The startup has also received backing from leading business figures and top venture capital firms and has signed up seven large organisations. With strong plans for growth, the company is undoubtedly one of the hottest fintechs worth keeping an eye on over the next few years.

Another of Chatsworth’s clients named in the list is Cobalt, a foreign exchange (FX) post-trade processing network based on shared infrastructure and high-performance technology. Cobalt’s unique solution leverages highly optimised technology alongside an in-house immutability service based on distributed ledger technology (DLT) to deliver a shared back and middle office infrastructure that is scalable, secure and fast.

By creating a shared view of trade data, Cobalt frees up back and middle office resources from multiple layers of reconciliation; creating a ‘golden’ portfolio of FX transactions from which to provide multiple services.

In May, Cobalt secured a strategic investment from Singapore Exchange (SGX), which operates Asia’s largest, most diverse and fastest growing FX exchange.

It’s great to see startups such as Previse and Cobalt be recognized for shaking up the status quo in their respective industries.

As the original fintech PR company, we can say with confidence that there isn’t a more disruptive sector than fintech. It has finally come of age and made it into the US-run Merriam Webster online dictionary – perhaps fitting, considering the shared digital origins!

READ THE LIST IN FULL

CordaCon – live from London

R3’s annual flagship conference kicks off this week in London, bringing together hundreds of developers, business leaders and blockchain engineers.

If previous years are anything to go by, the content will be fantastic – real examples, real case studies, knowledge sharing for developers, issue analysis and discussion and engaging presentations.

CordaCon provides a unique opportunity to meet and hear from R3’s clients about how they are leveraging Corda to solve real-world business problems.

Taking place over the course of two days with separate tracks of content – Developer Day (DevDay) and Business Day (BizDay) – it includes senior leaders from financial institutions, corporations, insurance firms, technology firms, independent software vendors (ISVs) and more.

The event, now in its third year, has consolidated its reputation as the fulcrum event for professionals working to apply blockchain-inspired technology to their sectors.

This is in part due to R3 having attracted a critical mass of members and partner, but also because the team’s approach was right from the start.

Rather than build an off-the-shelf blockchain solution and take it to market, R3 worked tirelessly to bring together the leading thinkers from their respective markets with the best developers and software engineers.

The resulting technology, Corda, was launched earlier this year and dozens of CordApps are being developed for it.

Such was demand that this year’s CordaCon was oversubscribed several times over. R3 and Chatsworth will be live tweeting from the event and sharing content and updates as they arise.

Look forward to seeing you there!

Is Fintech “adorbs”, or a “bingeable time suck”?

As the first fintech PR agency, Chatsworth is definitely of the view that it is the former.

Why do we ask? Because fintech has come of age and made it into the dictionary as one of 840 new words, in addition to also added this year are “adorbs” and “bingeable time suck”.

It joins the dictionary alongside ‘haptics’, meaning the science of touch. This is tech behind the vibration of a smartphone responding to your finger and a whole host of linguistic upstarts/startups. 

The definition of fintech is officially the “products and companies that employ newly developed digital and online technologies in the banking and financial services industries”. Unfortunately for us Brits, it’s not the Oxford English Dictionary but the US-run Merriam Webster online dictionary – perhaps fitting, considering the shared digital origins.

But more surprising the word, fintech, is far from new. The dictionary pinpoints its first known use to way back in 1971.  That was a good year – certainly for music – with What’s Going On, Sticky Fingers, L.A Woman, Hunky Dory and Led Zep 4 all released.

But despite its entry into the dictionary, fintech is in the bottom 10% of most used words. Oh well, nothing wrong with a little “exclusivity.”

R3 Wins Best DLT Tech Provider at Central Banking Global Awards

Yesterday, the inaugural Central Banking Fintech & Regtech Awards were held at the stunning Marriot Tang Plaza Hotel. We were very proud to see R3’s Anthony Lewis in attendance to pick up the award for the Best Distributed Ledger Technology Provider.

The new awards were held to recognise innovation in financial and regulatory technologies that were changing the way central banks and supervisors work.

R3 was picked from a strong contingent of blockchain/DLT based companies that are revolutionising the financial sector due to their transformative success in the past year.

The startup is currently engaged with Bank of Canada inside ‘Project Jasper’, an initiative which sets out to develop an interbank domestic payments settlement system, already the proof of concept touted ‘significant benefits.’

In March, HQLAx and R3 completed the first live securities lending transaction on the Corda platform – between Credit Suisse and ING. The transaction showed that using blockchain could help make the securities lending process faster and more capital efficient.

Corda’s success is evident not only by the number of institutions that use the ledger but also by those looking to invest in the technology. The company has raised over $122 million from more than 40 institutions, including Bank of America Merrill Lynch, HSBC and CLS.

In July, Corda Enterprise was launched to meet the demands of modern day businesses, especially complex institutions. With the launch, companies can now select a version of Corda that fits their unique needs – regardless of their industry, size, and stage of development. This means a wider range of institutions can realise the full potential of blockchain – executing complex logic and exchange of assets directly, simply and in strict privacy, without the need for costly reconciliation or a trusted intermediary.

We are proud to see R3 be continually recognised at the forefront of blockchain development in the financial market as we see the world begin to open their eyes to the potential of this technology.

SEC Tick-Size Pilot cost investors over US$300 million

Analysis of more than four million orders identified significant degradation in execution quality, for stocks priced under $40 per share

Pragma Securities (Pragma), a multi-asset quantitative trading technology provider, has published new research showing that the Securities and Exchange Commission’s (SEC) Tick Size Pilot Program has had a negative impact on market quality and execution – costing investors more than $300 million since it was implemented.

The research paper, entitled Tick Size Pilot – Evaluating the Effect of the Pilot Program on Execution Quality, estimates that investors trading stocks priced under $40 incurred significant costs. The total additional cost for all Test Group stocks could exceed $350 million by October 2018, when the pilot is expected to conclude.

Born out of the Jumpstart Our Business Startups Act (“JOBS Act”), the SEC’s two-year Tick Size Pilot Program commenced in October 2016. It was intended to evaluate whether widening the minimum quoting and trading increments – or tick sizes – for stocks of smaller capitalization companies (under US$3 billion) would improve the market quality to the benefit of U.S. investors, issuers and other market participants.

David Mechner, CEO of Pragma Securities, comments: “While the SEC’s Tick-Size Pilot was launched with the intent of helping investors and issuers, the outcome has been very different. Concerns around execution quality and costs for investors were raised early on, and proved to be well-founded. Given our findings, we strongly recommend that the Tick Size Pilot be unwound at the end of the Pilot period.”

Read the Wall Street Journal’s incisive article to learn more about the Tick Size pilot program.

Market data fees back in spotlight

The lack of transparency and rising cost of market data is a concern continually raised by participants across FX, equities, fixed income and derivatives markets.

The issue was brought to the fore again with two major hedge fund trade groups, the Managed Funds Association and the Alternative Investment Management Association, asking the U.S. Securities and Exchange Commission (SEC) to carry out a full review of market data costs and to require exchanges to be more transparent about the fees they charge.

We take a closer look at the industry’s concerns, the transparency of market data packages, their associated fees, what regulators are doing to tackle the issue and where we go from here.

Industry’s concerns

The two hedge fund trade groups are concerned that institutional investors continue to experience significant increases in market data fees, new fee categories and unbundling. They believe this restricts trade and harms competition.

“Our members have likened the practice to ordering a hamburger which used to cost $20, but now costs $7 for the bun, $15 for the beef patty, $3 per fixing and $1 per condiment, for an overall total cost of $33 (with lettuce, tomatoes, pickles, ketchup and mustard),” the petition said, according to Reuters.

The hedge fund industry is not alone in raising these concerns. Back in December 2017, 24 trading institutions, including banks and asset managers, called for more transparency and requested exchanges reveal their profit margins for market data products.

Fees skyrocketing to benefit of exchanges

Over the past decade, the costs and fees associated with market data have seemingly skyrocketed. It is clear from exchanges’ results that this increase in market data fees is positively impacting on their revenues.

This CNBC article reported that market data fees have become the growth area for exchanges. Indeed, ICE gets about 44 percent of its revenue by charging for market data, and at Nasdaq it’s about 26 percent.

Cboe Global Markets reported a 51% increase in income from market data fees for Jan-June 2018 when compared to the same period in 2017. The firm cited increasing market data revenue as a contributor to its 6% year-on-year rise in net revenue.

CME reported an 18% year-on-year rise to $113.8m, primarily due to a fee increase put in place in April.

Furthermore, a report by the Healthy Markets Association found that some market participants have seen the cost for equity market data products rise from $72,150 per month to $182,775 in five years – an increase of more than 150%.

From this, it’s clear to see that prices are increasing and are an important source of income for exchanges. It remains to be seen if exchanges will act to reduce prices and increase transparency themselves or wait for regulators to get involved.

Shining a light on opaque market data packages

Market data fees remain one of the most opaque areas of trading and has been a constant bugbear for FX institutions as well those operating in other financial markets. Institutions are now realising that they are paying different amounts for the data they receive.

Dan Marcus explains: “Large institutions are negotiating better prices and cutting special deals based on how much they agree to trade on a particular venue. This means smaller institutions with lower trading volumes and less bargaining power are struggling to get value for money.”

This is against the spirit of the FX Global Code which advocates greater transparency and equality in the FX market, he adds. “Market participants simply want affordable, accurate market data that allows them to trade, is good value for money and is delivered in a fair, equal and transparent manner.”

Regulators and market participants taking action

There is now a realisation that institutions are paying vastly different amounts for the data they receive. The good news is that the industry participants are increasingly vocal about their concerns, and as a result, the distribution, cost and transparency of market data packages are now coming under scrutiny.

The SEC has responded positively to the industry’s concerns. SEC Chairman Jay Clayton has confirmed the commission would hold an industry roundtable on the issue at some point in the near future, but no date has been announced.

Back in March, the European Securities and Markets Authority said it shares concerns that have been raised over the increase in fees for market data in the region and intends to take a closer look at recent developments.

It’s positive to see regulators such as ESMA and the SEC carrying out reviews and it will be interesting to see if their research results in action which addresses the market’s concerns.

Dan Marcus believes market data doesn’t have to be opaque and expensive: “At ParFX, we deliver market data to our customers at no additional cost – everyone gets the same data, at the same frequency in parallel. We also don’t negotiate special deals – this is in direct contrast to the approach of other providers.”

We see the move towards lower market data costs as inevitable, as the current pricing structure is unsustainable. It seemingly does not provide value for money, prices out smaller participants and provides an unfair trading advantage to those with the deepest pockets.

It’s time other venues and platform providers bring themselves in line with the standards we expect in 2018 by making market data more transparent and affordable for everyone.

Andy Bria joins LiquidityEdge as Chief Operating Officer

Electronic US Treasuries (UST) trading venue LiquidityEdge today announced that Andy Bria has joined as Chief Operating Officer, based in New York.

Since launching in September 2015, LiquidityEdge has rapidly grown its UST market share and volumes, establishing itself as an alternative model for fixed income. Following the success of the platform, LiquidityEdge has selected Andy to drive further growth and lead LiquidityEdge’s expansion plans.

Andy joins LiquidityEdge from NEX Group, where he held multiple senior roles across client services for both the flagship EBS and BrokerTec brands for over 13 years. Andy was Head of Client Services for six years and in 2011, successfully managed all client-facing aspects of the BrokerTec technology platform refresh.

Andy’s extensive experience in electronic trading and client relations, combined with his expertise in capital markets, ideally places him to help lead LiquidityEdge’s strategy and operations.

Nichola Hunter, CEO of LiquidityEdge, comments: “We’re delighted to welcome Andy to the team and believe his experience in electronic trading will be invaluable to LiquidityEdge in the years ahead. Andy’s strategic guidance will be greatly beneficial as we move into the next phase of growth and we look forward to working with him.”

Previse raises USD $7m in Series A funding round

Previse, the global supplier payments decisions company, has raised USD $7m in a Series A funding round, led by listed European fintech specialist, Augmentum Fintech PLC, and one of the world’s pre-eminent venture capital firms, Bessemer Venture Partners.

Hambro Perks and a number of existing and new angel investors also participated in the funding round.

Applying machine learning to B2B payments

Previse applies machine learning technology to solve a global business problem – slow B2B payments. The London-based fintech enables buyers to have all their suppliers paid instantly, as soon as the buyer receives an invoice. It uses machine learning to root out the invoices which may not be paid, allowing a funder to pay the rest immediately. The small fee paid by the supplier for instant payment is shared between the buyer, the funder and Previse.

How big is the slow B2B payments problem?

Slow business to business (B2B) payments caused by inefficient payment terms cost the world’s businesses US$300 billion every year. They cripple business and economic growth and are one of the leading killers of small suppliers. Paying slowly costs large buyers, because a supplier’s expensive cost of borrowing is priced into the cost of the goods or services supplied. Large buyers are also perceived to be taking advantage of their suppliers and are facing a growing public and political backlash as a result.

Significant demand for InstantPay

Since its founding in 2016, Previse has grown rapidly, signing up seven large organisations as well as receiving significant demand for its InstantPay technology from some of the world’s largest companies. It is also now listed on the G-Cloud – meaning instant invoice payment is now available for the £223 billion market that is public procurement.

The Series A funding will help scale Previse’s business to meet this significant, global demand, onboard clients and further develop its technology with the overall aim of ensuring that every supplier in the world can be paid instantly.

World-leading backers

Bessemer Venture Partners is America’s longest-standing venture capital firm. It has a global portfolio and has invested in companies such as LinkedIn, DocuSign, and Box. Augmentum Fintech is a listed fintech-focused venture capital investor and its portfolio includes leading UK fintech companies such as Zopa, Interactive Investor and Seedrs.

In 2017, Previse also raised £2 million in a seed funding round led by Hambro Perks, Founders Factor and high net-worth angel investors with close ties to high-profile multinationals.

It counts senior business figures such as Chairman of British Land, John Gildersleeve, and Sainsbury’s Chairman, David Tyler as members of its advisory board.

More positive news for high-flying UK fintech scene

This positive development from the London-based fintech comes just weeks after KPMG announced the UK held the crown for worldwide fintech investment in H1 of 2018. It attracted over US$16.1bn of inbound investment during the first half of the year, more than China (US$15.1bn) and the United States (US$14.2bn).

Previse has made huge strides since its launch in 2016, receiving backing from leading business figures, top venture capital firms and signing up seven large organisations. With strong plans for growth and a desire to transform global B2B payments, the company is undoubtedly one of the hottest fintechs worth keeping an eye on over the next few years.

Is the FX Global Code working?

In recent years, the FX market has been experiencing a period of turbulence. A series of scandals, following a string of misconduct issues, led to some market participants reassessing their existing relationships and trading processes.

To tackle the deficit of trust, the global foreign exchange (FX) market came together with policymakers to create the Global Foreign Exchange Committee (GFXC). This public-private partnership is tasked with overseeing and developing the FX Global Code, a set of guidelines which aim to improve transparency and ethics across the FX industry.

The FX Global Code debuted in May 2017. A little over a year later, the GFXC has carried out a thorough assessment of the progress so far and identified its priorities for the year ahead.

One of the main takeaways from the report was the sizeable levels of awareness and commitment theFX Global Code achieved in its first year. In a survey conducted in September 2017, 250 market participants said they would eventually sign the Statement of Commitment (SoC) to the Code. By May 201­­8, more than 326 had done so – an increase of 30%.

Along with the number of SoCs, 12 different public registers have been created to monitor and track sign-ups. Such numbers are indicative of how much the FX Global Code has embedded itself across the industry.

The Code has also achieved great penetration across the globe. It ranks high on the agenda of FX trade associations and at industry events around the world. Furthermore, in its first year, Mexico, South Africa, Scandinavia and Switzerland have either established FX committees to support the Code or are in the process of creating one. These local committees are critical to embedding a Code that is truly global and standardised.

Another success of the first year of the FX Global Code is the creation of training programs. These are created to aid FX traders that don’t have a process within their institution outlining how to follow the Code. One such program is the ACI FMA’s increasingly popular ELAC Portal, which provides step-by-step professional development for those looking to prove their adherence to the Code via tailored questions and real-life scenarios. This is a healthy sign that there is genuine demand in the FX community to follow the principles of the Code, and that it isn’t simply being forced upon industry professionals by the GFXC.

Of course, signing a SoC does not mean an institution has completely changed their practices to align with the Code. Rather, it indicates that they have reviewed their processes and intend to align with the principles laid out in the Code.

Looking the public registers, it appears the bulk of those that have adopted the Code’s principles are made up of sell-side institutions, central banks and FX market infrastructure providers. The buy-side and non-bank institutions are lagging behind, with only 11 of the top 25 asset managers and two corporates signing up to the Code.

According to the GFXC, the complexities of buy-side institutions and the lack of incentives for signing up are the reasons for the slow take up. The buy-side is much more diverse than the sell-side, and therefore has varying levels of resources.

At the same time, it is important to recognise that the Code has not been met with universal approval from all sections of the market. Issues such as last look have been contentious for some sections of the FX market.

Overall, it appears market participants believe the Code is robust in its current state, although evolution in line with market changes is inevitable. In this respect, a new working group has been set up to focus on integrating the Code into the ‘fabric of the FX market.’

To answer the question posed in the title of this blog, the Code is working and has achieved a lot of things it set out to do, securing significant awareness and commitment throughout the industry. However, there is a lot more that needs done – particularly around engaging the buy-side. It remains to be seen how the industry actually implements the principles laid out in the Code over the next year and the consequences, or lack thereof, for those that do not.

Global spot FX volumes cool off in July

Despite record-breaking temperatures across Europe and the US last month global spot FX volumes cooled off, with NEX, Thomson Reuters, Cboe FX, Fastmatch and FXSpotStream reporting decreases in average daily volumes (ADV).

NEX reported a 15% decrease in spot FX trading activity as its volumes dropped from $96 billion in June to $82 billion in July. This follows a 5% decrease in June from May. Year-on-year volumes remain the same.

Thomson Reuters’ spot FX volumes suffered a 14% decrease to $94 billion in July, its lowest recorded ADV of 2018. However, July’s ADV represents a 6.8% increase when compared the same period in 2017.

Cboe FX’s spot volumes encountered a 12% drop to $33 billion, compared with June’s $38 billion. Year-on-year painted a more positive picture for the platform with a 22% rise in spot FX volumes.

Spot FX volumes on Fastmatch fell by around 9% from $22 billion in June to $20 billion in July. This represents a steady 11% year-on-year when compared to July 2017.

FXSpotStream suffered the least this month, decreasing 8.7% from $30 billion in June to $28 billion in July. This represents a substantial 56% growth from the $18 billion recorded in July 2017.

CLS’s spot volumes also dropped 16.5% from June to $416 billion and were down 8% compared to the same period last year.

Global Spot FX

*All figures in US$

Insight

The summer lull weighed on spot FX volumes in July with major trading platforms all recording decreases of over 8.5%.

After a busy Q1 for trading platforms, firms are now returning to more regular levels of trading activity.

July saw the dollar rise against a basket of currencies due to continued fears over a trade war and expectations of US interest rate hikes.

The annual ‘summer slowdown’ means the results shouldn’t be interpreted as a worrying decline, but rather a seasonal break in trading activity.

On a more positive note, newly-released data shows FX trading volumes in London, the world’s largest currency hub, hit a new record in April. Over $2.72 trillion of trades were booked a day on average – beating the previous peak set in October 2014 – and is a strong vote of confidence in London as a global trading hub.

Looking beyond the UK, data from central banks in the USA, Japan, Singapore, Australia and Canada also paint a very positive global picture – suggesting trading activity is approaching close to USD 6 trillion a day. This would mark a new record for global trading activity.

Future predictions

So far in 2018, the FX market has reminded everyone of the difficulty in forecasting exchange rates as things can change abruptly and continuously.

All eyes are on the USA and China, which look set to continue their aggressive rhetoric as the trade dispute continues.

The Trump administration has threatened to slap more tariffs on Chinese goods. In response, the Chinese Government announced a list of possible tariffs ranging from 5% to 25% on $60 billion worth of U.S. agricultural, metal, and chemical products.

The trade war is fast becoming a currency war, with Trump accusing China and the EU of being ‘currency manipulators’ in an effort to gain an edge over the US by making their goods and services cheaper to buy in the US. Expect to see fluctuations in USD/CNY and EUR/USD over the coming weeks.

In Europe, the focus is on the Turkish lira. According to one analyst, buying the lira is like “catching a falling knife.” The currency has shed more than a quarter of its value against the dollar this year.

It will be interesting to see if the Central Bank of Turkey raises interest rates against the wishes of President Erdogan – an “enemy of higher interest rates” – in a bid to revive the lira’s value. Strategists at ABN AMRO believe it is unlikely that we’ll see any significant hike before Q4.

FCA unveils first steps to a ‘global fintech sandbox’

The UK Financial Conduct Authority (FCA) announced the launch of the Global Financial Innovation Network (GFIN), a new alliance to encourage the growth of fintech globally.

The GFIN is part of the FCA’s plans to formally create a “global sandbox”, an idea it first discussed in February. A sandbox allows companies to test new, innovative products that are not protected by current regulation or supervised by regulators, reducing the time and cost of getting products to market.

The new ‘global fintech sandbox’ will involve a collaborative effort with watchdogs from around the world including the US Consumer Financial Protection Bureau, the Monetary Authority of Singapore and the Hong Kong Monetary Authority. It aims to help regulators stay ahead of the new wave of emerging technologies.

Over the past few years, watchdogs have seen the rapid rise of data analytics, the advancement of technologies such as AI and the creation of new securities such as ICOs. Under GFIN, a fintech will be able to carry out tests in different countries at the same time to solve common cross-border problems such as data protection, KYC and anti-money laundering.

The UK has established a reputation for being at the forefront of the fintech revolution and received more investment in its fintech sector than any other country in the world during the first half of 2018.

Regulators have demonstrated their commitment and willingness to work side-by-side with fintechs; the FCA was the first regulator to create a domestic sandbox in 2016, while the Bank of England has completed proof of concepts with start-ups such as enterprise software firm R3. It also launched its own Fintech Hub in March 2018.

This subsequently led to calls for a global sandbox, which received near-unanimous approval from regulatory bodies all over the world.

It is important to note, however, that not everyone believes in the importance of regulatory sandboxes. The chief of New York’s financial regulatory body said on Tuesday that the agency is “fiercely opposed” to the U.S. Treasury Department’s recent endorsement of regulatory “sandboxes” for fintech firms. Superintendent Maria T. Vullo said, “the idea that innovation will flourish only by allowing companies to evade laws that protect consumers, and which also safeguard markets and mitigate risk for the financial services industry, is preposterous.”

It will be interesting to see whether the initiative will achieve its aims and whether financial services regulators will effectively collaborate to balance the potential benefits of innovation with their traditional policy objectives.

Chatsworth welcomes this positive collaboration between regulators and aspiring fintechs, both domestically and internationally, as this gives companies a safe environment to test new ideas and learn how to effectively scale their business concepts. We would encourage fintechs, investors, governments, and other interested parties to participate in the consultation process to ensure it is transparent and fair to potential firms wishing to apply for cross-border testing.

UK Holds the Crown for Worldwide Fintech Investment

The UK has received more investment in its fintech sector than any other country in the world, according to KPMG’s latest Venture Pulse Report.

With over US$16.1bn of inbound investment during the first half of the year, the UK is firmly ahead of China (US$15.1bn) and the United States (US$14.2bn).

Europe currently stands as the leading continent for fintech investment ($26bn), with the UK accounting for over half of this. Moreover, four of the ten largest European fintech deals were conducted in the UK. This includes the US$250m raised by Revolut in April and US$100m by eToro in March of this year.

KPMG also predicts that the UK will retain its crown in the second half of 2018.

The report cites artificial intelligence (AI) as one of the main sectors responsible for attracting fintech investment in the UK. Hot startups such as Previse and Mosaic Smart Data are utilising the technology to revolutionise areas as diverse as late payments and data analytics in wholesale financial markets.

Brexit

With the shadow of Brexit looming large, it is a timely reminder of the importance of the UK to the global fintech community. In a keynote speech at London Fintech Week earlier this month, our CEO Nick Murray-Leslie noted how finance and technology are almost indivisible; nowhere comes close to London in terms of dominance as a financial centre and, by extension, a fintech hub.

The strong data also dismisses the notion that Brexit is affecting the way investors think about the City and the rest of the UK. Our view is that Brexit is not the biggest risk to London; rather, it is the risk that the UK, and London in particular, becomes a victim of its own success and unaffordable or unattractive for people.

This city has been undergoing its own version of what scholars of US cities have termed “the Great Inversion”. This is the return of people, high-end housing and highly-paid jobs to city centres. If it becomes too expensive these people will go elsewhere and there may soon be only two types of people left: the wealthy and those who are in social housing. This will be a problem.

Looking Forward

Beyond the UK, fintech as an industry has sky-rocketed this year. Worldwide global fintech investment this year has already exceeded the whole sum value of 2017, proving why it’s crucial for the UK to remain at the forefront of this vital sector.

Chatsworth has been working with a number of award-winning start-ups and established fintechs such as Previse (late payments), Mosaic Smart Data (data analytics), R3 (blockchain), and can personally avow for how London can support a fintech business of any size, better than any other city in the world.

Looking forward to the third-quarter of the year, tax reforms in the US, a significant amount of dry powder and the continued flow of funding into the VC world are expected to keep the fintech investment market strong over the next quarter.

AI and data analytics are expected to remain high on the radar of VC investors. It is also expected that companies in maturing sectors, such as e-commerce, will continue to broaden their offerings and investments in order to access new or adjacent verticals.

But as KPMG notes, an area that may be one to watch over the next quarter will be valuations – particularly for companies with no tangible assets, where investors are focused on what the company might do in the future. The level of assumption and risk involved in these types of valuations is quite high and it is still to be seen if these valuations will be substantiated.

London’s Fintech Scene Greatest Threat Is Not Brexit

Finance and technology are almost indivisible. Nowhere comes close to London in terms of dominance as a financial centre and, by extension, a fintech hub.

Activity in the sector has really exploded in the last half decade. Inward investment to London has doubled since 2014 and it was the leading sector for investment in 2017. UK fintech attracted a record £1.34 billion VC funding, double the amount of any other European country.

That is why some of the most exciting fintech companies in the world, like R3, a consortium of over 200 banks and funds building a blockchain for finance and business, are building right here, in London.

Why London and Brexit?

This city has been the beating heart of international finance for centuries. The Bank of England was the second central bank in the world and provided the financial flexibility which would be the foundation of the Empire’s power and which has pertained to this day.

Towards the turn of the millennium, the “Big Bang” reforms of the 1980s complimented the infrastructure and expertise which had evolved from running the Empire and led to London becoming the model for global financial administration. Only in a city with London’s concentration of intellectual capital would this have been possible.

So while our cousins across the pond had to deal with the bureaucracy and the restrictive regulation of the Sarbanes-Oxley Act, we didn’t. Companies simply decided to avoid the hassle by conducting their business in the US and listed their stocks in London where the people and skills were ready for them.

London also holds a unique position in terms of our legal environment, M&A expertise and even our timezone which, even today, remain important factors.

Financial professionals are redefining fintech

Fast forward and these advantage carry over into the fintech sector. There are now legions of financial market professionals and traders moving into fintechs, working with the designers and coders.

Many of my clients are former desk heads or former heads of market data – they have had successful careers but had spotted opportunities to apply technology to improve what they do. These people are bringing their knowledge of the markets, instruments and the complexities of international regulation to the table.

Brexit

Just because London is the undisputed home of fintech today, doesn’t mean that is always going to be the case. I see a couple of threats on the near horizon that need dealing with to stay on top.

Brexit is an obvious concern. We simply must make sure that we remain open for business and be seen to be open for business. I do not agree with the former Foreign Secretary’s reported view that business should go “reproduce” with itself.

If the final deal jeopardises the status of London in the global markets there’s more at risk than just transactions going elsewhere. This is about a concentration of talent and access to capital. The way the UK makes relationships with other countries and structures its own agenda in the run up to Brexit will be key to its success.

London’s talent pool

So Brexit is clearly a risk, but I don’t actually think it’s the biggest risk to London. I think the biggest risk is that it becomes a victim of its own success and unaffordable or unattractive for people.

This city has been undergoing its own version of what scholars of US cities have termed “the Great Inversion”. This is the return of people, high-end housing and highly-paid jobs to city centres.

Inner London’s growth was in part fostered by the ability of creative people from various fields to cluster together and share ideas.

If inner London becomes too expensive these people will go elsewhere. In inner London there may soon be only two types of people left: the wealthy and those who are in social housing. This will be a problem.

London needs to be good for both business and for people and their families. That means ensuring individual and corporation tax is sensible and that families can afford to live in a capital with effective services.

Word to the risk takers

Some final words of tribute to the fintech risk takers who have put their time, their own and their investor’s money, plus a whole lot of coffee and sleepless nights into their concept, design and build.

If you’re doing it in the wholesale markets space, you’re competing for attention in the face of an established tech infrastructure, highly resistant to change. It’s tough, but ultimately the USP of your platform or offering will do the talking. Never give up. Get it right and you will change a – part of this business world for the better.


Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

London FX turnover hits record high

The results of a new survey released by the Bank of England have revealed record-breaking FX turnover in the UK during April this year.

The survey, compiled with the responses of 28 London-based institutions, shows that daily FX turnover during the month was a staggering $2,727bn – up 15% on October last year and 14% on April last year.

The Bank of England says this represents the highest reported turnover on record, beating the previous peak of $2,711bn set in October 2014.

Turnover in FX swaps accounted for the largest increase, growing by 18% compared with October last year. There was an 18% increase in turnover in the sterling-dollar currency pair, an 11% increase in euro-dollar trading and a 13% increase in dollar-yen. 

In particular, London’s turnover in the British pound rose to a record $351 billion, up 18% from October 2017 and nearly doubling from last year. This was driven largely by traders dumping the pound against the dollar when the Bank of England declined to raise interest rates.

The survey results reflect London’s continued position as the epicentre of the global currency markets, despite ongoing debate about the UK’s future trade arrangements post-Brexit. The UK growth rate in turnover also overtook US data revealed today by the Federal Reserve Bank of New York, which showed a 5.2% increase on a six-month basis and 11.7% year-on-year, with turnover only around one-third of that in London.

As ever, volatility has been the major driver for the increase in turnover. After years of ultra-low interest rates across the globe, central banks are beginning to diverge again in terms of where they set their policy rates. Growing concerns over a global trade war and political turmoil in the Eurozone have also contributed significantly to this volatility.

FX trading remains one of the City’s most profitable industries, and the Bank of England’s survey is a timely reminder of the dominance of the UK’s FX providers in a period of significant political and economic uncertainty for the country.

Chatsworth delivers opening keynote at London FinTech Week

To Westminster, where Chatsworth’s CEO Nick Murray-Leslie was the opening keynote speaker at this years’ London FinTech Week.

 The event brought together the best and brightest FinTech firms, individuals, developers, and entrepreneurs.

 FinTech is a truly global sector, with focussed hubs developing in both developed and emerging markets.

Nick’s speech focused on London as a FinTech hub, how London had gained traction as a global fintech hub and what it must do to retain that critical position, from attracting investment and venture capital, the talent pool, expansion opportunities and the impact of Brexit.

He also introduced Richard Brown, CTO of R3 for a deep dive into how a major banking technology consortium chose London for its technical and operational HQ and how the city’s talent pool and unique position in the intersection of finance, timezones and continents contributed to its success.

R3 launches Corda Enterprise with world’s first blockchain firewall

This week Chatsworth worked with R3 in New York and London on the roll out the much-anticipated enterprise version of its Corda blockchain platform for businesses.

Corda Enterprise has been specifically optimized by R3 and its ecosystem to meet the demands of modern day businesses, especially complex institutions.

With the launch of Corda Enterprise, companies can now select a version of Corda that fits their unique needs – regardless of their industry, size, and stage of development. This means a wider range of institutions can realise the full potential of blockchain – executing complex logic and exchange of assets directly, simply and in strict privacy, without the need for costly reconciliation or a trusted intermediary.

Corda Enterprise includes the world’s only Blockchain Application Firewall, which enables the platform to be deployed inside corporate data centers while retaining the ability to communicate securely with other nodes anywhere else in the world. This is a critical requirement for many businesses when selecting a blockchain platform.

Corda Enterprise unlocks new opportunities for R3’s partner firms to expand their business, deliver new products to market faster and transform the industries in which they operate. Applications developed by partners such as Finastra, Gemalto, Guardtime, GuildOne, TradeIX and Tradewind Markets are now live on both Corda Enterprise and Corda, serving a rapidly growing community of end users in sectors as diverse as insurance, healthcare, shipping and financial services.

The launch of the platform is a watershed moment for business blockchain technology, and we are excited to continue supporting R3 as Corda Enterprise gains widespread adoption in markets across the globe.

Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

Deepwell enters new phase with 7 major hires across three continents

DeepWell Liquidity Management, the global financial markets intermediary for the buy-side community, has added seven senior market professionals to its team across three continents as it eyes further growth and expansion into different asset classes.

DeepWell launched in September 2017 and offers global coverage across a range of OTC and exchange-traded FX products, including spot, forwards, options and futures.

The company’s new hires experience range from the who’s who of the banking world, from, Credit Suisse, Morgan Stanley, Deutsche Bank to RBS, with more than century’s worth of experience between them.

In an interview with Finance Magnates, Deepwell CEO Richard Leighton spoke on the purpose of the hirings, “These additions will allow us to continue meeting the demand we are experiencing for our services and will help us to grow our market share in FX. Growing our capacity also enables us to service more institutions and investors and look at expanding other markets and products.”

These hiring’s have evidently taken place with a larger goal in mind. In the same interview, Leighton went to explain, “We took the strategic decision to set up offices in three of the biggest FX hubs in the world as we believe these have the greatest growth potential. We expect to grow our team at each of these locations as we continue to increase our market share in FX and expand into new asset classes.”

Mosaic Smart Data & Previse named in Europe’s 50 Hottest Fintechs

Last week, Fintech City unveiled the sixth annual list of Europe’s top fintech50 companies. The list is selected by a panel of internationally renowned figures across finance and technology from a long-list of 1,800 companies. We were very proud to see Mosaic Smart Data and Previse added to the list this year for the first time.

Drawn from both B2C fintechs and those aimed at the institutional market, the list includes a wide range of business models and technologies.

Mosaic Smart Data and Previse lead a strong contingent of data analytics and machine learning companies. Both companies have had huge success targeting these technologies at specific, previously unsolvable, business problems.

In the case of Mosaic, it is enabling institutions to, for the first time, see their fixed income, currencies and commodities business in real-time. It uses advanced analytics to enable sales teams to generate useable insights to boost their performance and improve client servicing. In the last twelve months, Mosaic announced its first client, secured funding and expanded its team.

Previse is using machine learning to enable large businesses to have their suppliers paid instantly. It has made it onto the list in just its second year of business after securing funding from the Scottish Government and welcoming senior business figures such as John Gildersleeve and David Tyler to its advisory board.

As well as analytics companies like Mosaic Smart Data and Previse, a big trend in the 2018 list are blockchain companies. The list includes businesses applying the technology to a range of fields, from wholesale payments settlement to digital identity and cybersecurity.

Data analytics and blockchain are moving beyond theory and are now actively transforming global finance. It is, therefore, no surprise that these technologies feature strongly in this list of the most exciting financial technology companies.

We are proud to be working with some of the companies in the vanguard of these changes, both in Europe and the United States.

R3 named Best Blockchain Initiative of the Year at Financial News Awards

R3 took home the ‘Best Blockchain Initiative of the Year‘ award at last night’s Financial News Trading & Technology Awards at the V&A in London.

The awards set out to celebrate the success stories of trading and technology firms operating in, and supporting, financial markets over the past year.

And it’s fair to say that the past twelve months have been very good indeed for R3. Its global network more than doubled in size, growing from 75 members in March 2017 to more than 200 today, the first CorDapp on Corda, R3’s blockchain platform has gone live and a successful Series A fundraising round in May 2017 raised $107m from more than 40 investors.

The next year is already shaping up to be another busy one for R3 with the commercial deployment of Corda Enterprise and more CorDapps due to be launched later in 2018 so watch this space.

Creative Clerkenwell shows its true colours during CDW 2018

Clerkenwell Design Week 2018 kicked off this week, showcasing the area’s creativity and innovation with a programme full of thought-provoking exhibitions and must-see installations.

Thousands of people from around the country have descended on Clerkenwell to attend or take part in the world-class A&D festival.

Chatsworth Communications is pleased to support the 9th edition of the Clerkenwell Design Week 2018. We look forward to this event every year and in 2018, we provided data which was used for one of the installations.

Being based in Clerkenwell Close has meant we have seen the heart of the action. One of our favourite parts was in the picturesque grounds of St James Church which featured ‘Design Fields’, a showcase of leading furniture, lighting and product design from around the world.

There was also a lot of interest in Platform, a show that recognizes some of the world’s most exciting up-and-coming design talent.

New for 2018 was ‘Light’, an installation which took over Fabric nightclub. The former cold-store turned nightclub hosted within its brick vaults an exhibition dedicated to top international lighting brands with spectacular stand alone lighting installations.

The last events take place tonight, so drop into Clerkenwell to avoid missing out on the colourful creativity on display before the remarkable fixings are put away for another year.

UK Remains at the Forefront of the Fintech Revolution

Despite fierce competition, the UK remains at the forefront of the fintech revolution according to the ‘Finance for Fintech’ report, launched recently by London Stock Exchange Group and TheCityUK.

The independent survey, carried out by YouGov, interviewed over 400 fintech companies across eight countries, all of which have had at least Series A funding rounds or above, and provided interesting insights into the global fintech scene.

Bullish UK fintech scene

UK fintechs are bullish about their growth prospects.

The research highlighted that fintech companies operating in the UK expect to grow by 88 per cent over the next three years, 8% higher than the overall average.

Vital to this growth is raising finance and this process is reportedly more straightforward for UK fintechs in public markets than those operating in other countries, making it an attractive location for fast-growth companies. Chancellor Philip Hammond recently supported this view, pointing out that investment in UK fintech more than doubled last year, outpacing the funding of EU rivals such as Germany.

Interestingly, fintechs surveyed placed the UK as the third best  location for businesses seeking to grow their international footprint, only behind the US and China.

Fintech Revolution in Europe?

That said, competition is heating up.

Europe increasingly seeks to strengthen its position as a regional fintech hub. On 8 March, the European Commission announced an action plan on how it will do just that; new rules that will help crowdfunding platforms to grow across the EU’s single market.

The impact of this will be interesting as one of the primary barriers to fintech growth is competition according to 43% of those surveyed.

Regulation

Fintechs require a supportive global regulatory environment to flourish.

You have to applaud the FCA’s exploration of a potential global regulatory sandbox following the success of its UK version. The UK version, launched in 2016, helped fintechs to test innovations with real customers in the live market but under controlled conditions.

The global sandbox could allow firms to conduct tests from London into different jurisdictions at the same time, enabling regulators to collaborate to solve cross-border problems.

This has the potential to strengthen London’s position as a destination for global fintech companies as they can come from all around the world to test their products and find out how they can expand internationally.

Fintech is by definition without borders.

The research shows that fintechs across the world are becoming increasingly cross-border in their growth aspirations with 72% of the 400 companies surveyed planning to expand into new countries. 73% believe they will need to move into new or develop existing market sectors in order to achieve this growth and almost three-quarters believe long-term growth will be driven, at least in part, by new technologies.

It is worth noting that those who have reached Series D rounds or above have the biggest appetite for expansions and anticipate achieving a monumental growth of 320%.

While fintechs seek global expansion, it is important they don’t lose sight of the importance of being located close to the core financial hubs as crossover will, by and large, determine their success.

It is clear that in order for fintechs to thrive and continue to transform the global financial services sector, they need access to finance, a supportive global regulatory environment and proximity to the global financial services sector. The UK currently offers all three.

The report demonstrates that while the UK remains at the forefront of the fintech revolution, it must continue to innovate and work collaboratively in order to maintain its leading position, especially with Europe hot on its heels.

 

For daily updates from Chatsworth Communications follow us on Twitter.

Banks Prioritising Digital Transformation

Fintech has barely even got started if a new report from EY is to be believed. Less than 20% of banks believe they are doing enough as a business to invest in technology, according to EY’s Global Banking Outlook study. This, despite some substantial leaps forward in technological capability and significant investment.

To combat this, more than half of banks surveyed in the report expect budgets for technological investment to rise by 10% this year, and more than half of banks aspire to be digitally maturing or digital leaders by 2020. Banks appetite to invest and partner with fintech firms may in part explain why last year was a bumper year for fintech VC funding, with $1.8 billion raised by UK firms.

This new investment opens up major new growth opportunities for the already thriving financial technology market.

The impact of fintech is being felt in every part of finance, from retail banking to back-office compliance. But one of the key focuses for banks over the past few years has been using technology to try to deal with stringent compliance and regulation, which slows down, complicates and adds expense to transactions.

Solving this is one of the key promises of distributed ledger technology (DLT) which is being touted as a new way to create trust between institutions, lower compliance costs and create information sharing efficiencies. This year, we are likely to see the first examples of DLT moving from proof of concept into market operation.

Data analytics and machine learning are likely to be another hotspot of activity this year. Many banks have begun announcing project designs in all kinds of areas of the bank, from back-office automation to the use of machine learning to improve execution quality.

For example, JP Morgan is working with UK based data analytics company Mosaic Smart Data to unlock insights from its internal FICC data to improve client handling and FICC performance.

In trade finance, Previse is looking to end late payments for SME suppliers with its advanced machine learning and innovative finance model which creates opportunities for buyers, sellers and banks alike.

The last few years have seen an explosion in financial technology. However, emerging technologies begin to mature, and banks continue to strive to be more efficient and effective, it looks like the fintech surge is only just beginning.


Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

Carillion collapse shines spotlight on late payments issue

The collapse of construction giant Carillion has focused media and government attention on the global issue of payment terms after it was discovered the group paid subcontractors with a 120-day delay. These delayed payments meant many suppliers had to resort to expensive bank finance to stay in business while others are now facing bankruptcy.

Recognising the importance of ending the culture of late payment, two FTSE 100 chairmen have joined the advisory board of Previse, a UK based company which uses artificial intelligence to solve slow payments for the entire supply chain.

Chairman of supermarket chain J Sainsbury, David Tyler and chairman of property group British Land, John Gildersleeve have joined the company as investors and advisers.

Previse’s AI technology is designed to enable large firms to pay suppliers on the day they receive an invoice. The London-based firm’s technology calculates a buyer’s likelihood of paying an invoice, before deciding which invoices will be paid, so small suppliers can be paid instantly.

David Tyler said: “The length of time it can take for suppliers to be paid hurts not only them, but the large companies buying their products and services as well.” He believes that Previse will bring benefits to the entire supply chain and that the company has a bright future ahead of it.

Mr Gildersleeve, who is also deputy chairman of telecoms company TalkTalk, told the Financial Times that Previse could tackle an issue that has, “infected British business forever.”

Lengthy payment terms and the prevalence of slow payments by large buyers, which affects three in five SME suppliers, cause 50,000 UK SMEs to close each year. Previse’s artificial intelligence technology allows even very small suppliers to receive payment the day they issue their invoice by instantly identifying if an invoice is correct and allowing a funder to pay the supplier immediately based on this information.

“I am proud to be able to welcome our new board members who represent incredible senior experience across such a wide range of industries with significant supply chains.” Said Paul Christensen, CEO of Previse. “I think this shows the deep understanding across industry that slow payments are a real problem, and confidence in our approach to tackling the problem.”


Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

SWIFT and CSD community advance blockchain for post-trade

SWIFT and seven central securities depositories (CSDs) have signed a Memorandum of Understanding (MOU) to work together to demonstrate how distributed ledger technology could be implemented in post-trade scenarios, such as corporate actions processing, including voting and proxy-voting.  The group will investigate the types of new products that can be built using it, and how existing standards such as ISO 20022 can support it.

Abu Dhabi Securities Exchange, Caja de Valores, Depósito Central de Valores, Nasdaq Market Technology AB, National Settlement Depository, SIX Securities Services and Strate Ltd are among the CSDs participating in the DLT project with SWIFT. Additional CSDs are expected to join in the coming weeks.

“To ensure interoperability and smooth migration, it is crucial that new technologies support existing common standards such as ISO 20022,” says Stephen Lindsay, Head of Standards at SWIFT. ““ISO 20022 is a messaging standard but also defines terminology across asset classes and corporate actions. An agreement on using the same set of definitions and concepts is important, as they will be independent of the technology or data format.”


Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

J.P. Morgan deploys Mosaic Smart Data for fixed income data analytics

As a recent piece in the FT pointed out, traders are searching for ever more inventive data streams to try to make better predictions about their market or get an edge over the competition. Whether that be advanced social media analytics, algorithms to read the news or even using drones and satellite images to look at factories, banks, and hedge funds are investing significant amounts in collecting and analysing data.

But, banks know that there is a vast wealth of data created and stored within the institution created simply through the normal course of the trading day. This is free, and it is completely proprietary.

JP Morgan Data Analytics

The problem is, data within the bank is distributed across desks, systems and messaging languages. Bringing that all into one, aggregated and standardised form so that the algorithms can work their magic and deliver valuable insights is a herculean task.

But that is exactly what Mosaic Smart Data has announced it is doing J.P. Morgan.

By using sophisticated historical, real-time and predictive analytics algorithms, the Mosaic’s platform will provide, in the first instance, J.P. Morgan’s rates, sales and trading business with advanced tools to accurately provide tailored client service. This innovative technology enables users to better visualise and anticipate market and client activity and thereby offer a better service. It can also reduce the cost and complexity of compliance.

“Having a more holistic view of trading data will improve our service delivery for clients.” Said Troy Rohrbaugh, Global Head of Macro at J.P. Morgan. “The Mosaic platform integrates securely with our existing technology infrastructure, and enables our teams to quickly make better-informed decisions.”

Once these fundamentals of a data analytics platform are in place. Mosaic can roll out advanced machine learning and predictive analytics which will help sales teams to predict their clients’ behaviour, allowing them to better facilitate client needs and improve their performance.

“Data analytics and artificial intelligence are changing the face of investment banking.” Says Matthew Hodgson, CEO, and founder of Mosaic Smart Data. “Banks understand that the insights locked away in their transaction and market data are potentially some of their biggest competitive advantages. They already have the raw materials, but MSX® gives them the tools to aggregate and standardise that data and put it to work intelligently.”


Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

Thousands descend to Toronto as Sibos 2017 gets underway

Thousands of delegates flew in from around the world to Sibos to network, debate and discuss topical issues relating to business, technology and finance. The four-day annual event is organised by SWIFT, the global member-owned cooperative and the world’s leading provider of secure financial messaging services.

Sibos has a track record in attracting the highest calibre of speakers, and this year is no different. David McKay, President and Chief Executive Officer at RBC, was the chief guest speaker for the opening SWIFT plenary. He addressed a full audience alongside SWIFT’s Chairman of the Board, Yawar Shah, and SWIFT’s CEO, Gottfried Leibbrandt. Between them, they touched on the key events during the past 12 months, the industry challenges ahead, and SWIFT’s role in addressing them.

Fintech, transaction banking, blockchain, SWIFT gpi and financial crime compliance all featured on the agenda for day one, and announcements from SWIFT relating to the latter two sparked the interest of a few observers.

Anyone working in the B2B payments space, be it a bank, a corporation or a technology vendor, will be aware of SWIFTgpi. It was announced today that SWIFTgpi surpassed two million payments last month – rapidly becoming the new standard in cross-border payments.

More than 120 leading transaction banks, representing over 75% of all SWIFT payments, are signed up to the service. By doing so, they are utilising the innovative payments Tracker, a cloud-based application accessible via APIs. Banks embed the gpi Tracker information into their payments flow applications and front-end platforms, allowing their customers to track gpi payments in real-time.

This addresses a serious bugbear. Traditionally, when a corporate treasurer sends a request for a cross-border transaction to a bank, they have no visibility of what actually happens with that request. Treasurers often liken this to a “black hole”; they have no view as to when payment finality occurs or its final costs. This can lead to problems with suppliers or end-customers, not to mention increasing financial risks resulting from payment delays or non-compliance with regulatory requirements.

For all of the blockchain aficionados out there, SWIFT also confirmed it will provide a sneak peek of the results from the DLT proof of concept (PoC) relating to SWIFTgpi during Sibos, ahead of its conclusion in November.

Harmonsing international compliance standards

A major announcement relating to SWIFT’s Compliance division also became a topic of interest. SWIFT’s Know Your Customer (KYC) Registry, utilised by thousands of banks around the world is being aligned with the new Wolfsberg Due Diligence Questionnaire (DDQ) for Correspondent Banks.

This is the latest in a long line of close collaboration between SWIFT and Wolfsberg to address a broad range of compliance challenges facing the correspondent banking community and beyond. The Wolfsberg Group is a member of SWIFT’s Financial Crime Compliance Advisory Group and is made of thirteen global banks. It aims to develop frameworks and guidance for the management of financial crime risks, particularly with respect to KYC, AML and Counter Terrorist Financing (CTF) policies.

The Wolfsberg DDQ has been updated in response to an increase in regulatory expectations. Aligning the Registry with the Wolfsberg DDQ ensures coverage of up to 90 percent of the information correspondent banks typically require for KYC compliance, delivering major time and cost savings. By answering every Wolfsberg DDQ question directly on the KYC Registry, members benefit from increasing transparency and streamlined due diligence processes.

So, all in all, it looks like a busy but successful day at Sibos so far. Stay tuned on all things related to Sibos by following @Sibos, @chatsworthcomms or search #Sibos2017.

Mosaic shortlisted for fintech company of the year by City AM

Congratulations to the Mosaic Smart Data team which has been named in this year’s top five fintech companies in the City AM awards.

The awards celebrate the best of The City in an aim to identify ‘the most bold, successful, and principled companies and individuals’ of the year. The fintech category recognises some of the most innovative British fintech successes, and celebrates London’s role as one of the world’s centres of fintech excellence.

Mosaic Smart Data CityAM

Mosaic was shortlisted as one of the top five categories by City AM’s editorial staff who, announcing the shortlist in the daily paper, described it as “one of the best financial services tech innovations of recent times”.

With financial institutions facing a challenging period in FICC markets, Mosaic allows banks to see how their entire FICC business is performing in real time and help traders identify much-needed liquidity in FICC markets.

As the volume of data linked to trading activity and interactions with clients increases, the challenge to harness and analyse that data in real time becomes ever more critical. Mosaic Smart Data understands that the true value of data comes not only from the intrinsic individual data streams themselves, but also from the correlations and inferences that can be drawn from the aggregated data from each client.

Its cutting-edge technology addresses the challenges facing institutions trading in today’s FICC markets, including change management, productivity, efficiency, restructuring and the growing automation of trading processes.

The final winners of the City AM awards will be chosen by a panel of prestigious judges from the world of business, including Virgin Money boss Jayne-Anne Gadhia, WPP’s Sir Martin Sorrell and Sky News’ highly experienced City Editor Mark Kleinman.

We wish Mosaic the best of luck for the awards ceremony, which will be held on 9th November at Grange St Paul’s Hotel.


Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

SWIFT and Chatsworth leading the debate at SIBOS, 2017

The Chatsworth team is proud to be supporting SWIFT at SIBOS, the world’s premier financial services conference, exhibition and networking event. What started out as a banking operations seminar in 1978, has grown into the premier business forum for the global financial community to debate and collaborate in the areas of payments, securities, cash management and trade.

Organised by SWIFT for the financial industry, Sibos has brought financial leaders together, over four decades, to network, collaborate and make sense of changes in the industry, helping to build an understanding of the forces affecting the financial community. 

 SWIFT is all about connectivity. The organisation remains the world’s leading provider of secure financial messaging services, providing a platform for messaging, standards for communicating and products and services to facilitate access and integration; identification, analysis and regulatory compliance.

 The organisation connects more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories. Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure.

 The Chatsworth team will be in attendance throughout the event in Toronto, where the team will be working to support SWIFT in highlighting the challenges facing the financial eco-system and how their connectivity and experience can help. Chatsworth’s CEO will also be moderating some of the panel debates.

Get in touch

Email: swift@chatsworthcommunications.com   

Twitter: @chatsworthcomms

We look forward to seeing you there. 

Compliance stream at Sibos will explore rapidly changing geopolitical and financial crime environment

Experts and regulators to address the new normal in sanctions, counter-terrorist financing, anti-money laundering, fraud, and cyber security

Sibos introduces a stellar line-up throughout the Compliance stream at this four-day event in Toronto. Multiple sessions will address the profound impact of the shifting geopolitical, financial crime, and cybersecurity environment. Panel debates and deep-dive sessions will cover topics such as the future of financial intelligence sharing; counter terrorist financing in the ‘lone wolf’ era; the potential of artificial intelligence to improve sanctions and AML compliance; and the fraud and cyber-crime ‘new normal’.

An ‘in conversation’ panel with Wolfsberg Group members will unveil the coming year’s priorities and trends. A Latin America-focused panel will provide an overview of the region’s banking compliance challenges.

Notable speakers participating in this year’s Compliance Forum include:

  • Jennifer Calvery, Global Head of Financial Crime Threat Mitigation, HSBC
  • James Freis, Chief Compliance Officer, Clearstream Banking
  • William Fox, Managing Director Global Head of Financial Crime Compliance, Bank of America Merrill Lynch
  • Neil Isford, General Manager, Watson Financial Services Solutions, IBM
  • David Lewis, Executive Secretary, FATF
  • Jerry Perrullo, Chief Information Officer, ICE
  • Denise Reilly, Wolfsberg member, Global Head of Anti-Money Laundering, Citi

Must-attend sessions include:

Counter-terrorist financing- are we really stopping the bad guys – 17 October at 9:30

Panelists will explore how can banks – and governments – adapt to stay one step ahead of the bad guys, what is working and what needs to work better, and whether stringent regulations are pushing legitimate actors outside of the financial system without actually preventing acts of violence.

Fraud and cyber high alert: The new normal? – 18 October at 9:30

As high-profile security breaches continue to reverberate, this panel discussion of experts from a range of industries will discuss the benefits gained from collaboration, the landscape of payment risks, and the skills that must be developed and recruited to protect institutions and the industry.
“In conversation” with Wolfsberg – Pressing priorities and trends 18 October at 15:30

A lively discussion with Wolfsberg representatives will discuss the industry’s latest challenges, trends, and the coming year’s priorities.

Read more about the Compliance stream on Sibos.com.

The Sibos streams enable attendees to build their Sibos agenda around the topics of interest to them.

Other Sibos Streams and Tracks include:

Banking

Technology

Securities

Standards Forum

Artificial Intelligence

About Sibos

Sibos is an annual conference, exhibition and networking event organised by SWIFT for the global financial industry. Next month, some 7,000 decision makers and topic experts from financial institutions, market infrastructures, multinational corporations, and technology partners gather in one place to do business and collectively shape the future of payments, securities, cash management and trade.

When: Monday 16 October – Thursday 19 October 2017

Where: Metro Toronto Convention Centre (MTCC)

Website: www.sibos.com

Contact: JoAnn Healy | Press@Sibos.com | +1 212 455 1802

Get your complimentary Sibos Press Pass today

Accredited journalists are welcome to attend Sibos free of charge. To obtain your complimentary press pass for Sibos 2017 Toronto, contact: Registration@Sibos.com.

Don’t miss your chance to be right in the middle of the news at the premier financial services event of the year.

Follow us on Twitter: @Sibos #Sibos

Follow us on LinkedIn: www.linkedin.com/company/Sibos