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October 29, 2019

Talking Emerging Markets FX with R5 CEO Jon Vollemaere

We talk with Jon Vollemaere, CEO of R5, about all things EMFX……and especially China 

We talk with Jon Vollemaere, CEO of R5, about all things EMFX……and especially China 

 

OTC – What services does R5 offer?

JV – R5 provides a full service of Emerging Markets FX (NDFs and G10) for Banks, Brokers, Funds and Asset Managers. 

Our focus is to modernise the antiquated EMFX marketplace – which is currently limited to old technology and voice broking for price discovery, to bilateral credit agreements that limit overall growth and volumes, and by a lack of access to natural onshore liquidity. We concentrate on identifying and overcoming barriers that prevent Financial Institutions in EM countries from accessing Global Markets.

 

OTC – Where did the idea come from?

JV – Two banks approached us with the idea, wanting more accurate EMFX prices and to provide their clients with better electronic trading channels. All this whilst increasing efficiency in their front- and back-office. 

We didn’t want to simply add EMFX onto an existing trading platform, because these markets trade in different ways to the liquid G10 currencies. We built our platform from scratch, including supporting a centralised credit model that works in credit constrained countries.

Our first e-NDF trades went live in 2016. What was an unproven idea has become a reality, with the wider market now following our lead.

 

OTC – What has been your journey since launch?

JV – We started with 2 currencies and 3 clients. Now we offer 35 pairs for multiple tenors and multiple products. We continue to add new clients and increase trading volumes – clients include some of the biggest names in the business, in sell- and buy-side institutions.

We are fortunate to enjoy considerable support from various British Government departments, as we tend to focus on post Brexit growth economies.

We have also worked with the Shanghai Clearing House to launch a service called 'Connect', which enables regional banks in China to trade in London’s FX market.

 

OTC – What are your future plans?

JV – We have both R5 Swaps and R5 BRI (Belt & Road Initiative) going live in the near future.

R5 Swaps will focus primarily on the London RMB Swap market, offering a major leap forward for those trading Chinese swaps. R5 BRI is our first foray into African currencies, where we support currency risk management for Chinese Financial Institutions which have an exposure in Africa.

We see significant potential for DLT and Blockchain across the industry, particularly in China. There are many interesting use cases for the protocol, even though adoption has been slow to date.

And we continue to expand the centralised offerings in our R5C3 model to include Prime Brokerage, Prime of Prime, Clearing and Hybrid Credit models.

 

OTC – What are you busy with now?

JV – We've recently been asked to share the stage with ex PBOC governor Zhou and various party members in the upcoming Chengfang FinTech Forum in Beijing. That is a big honour.

We have also been nominated for an award at the Singapore FInTech Festival. This is the largest FinTech event in the world, and includes over $1m in prize money for the winners. Both PM Modi and Christine Lagarde were in attendance last year, and just being nominated adds to our credibility.

 

OTC – Any final thoughts?

JV – We are big supporters of London FinTech and the continued growth of this market. Many London FinTech companies have a solution which is quicker, faster, cheaper, and simply better than that of the incumbents. The only thing that many of them lack is the hundreds of customers the incumbent holds…..for the time being.


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