Peter Nabicht, co-founder of 12Sided Technology, sees the data deluge in the FX space as a boon traders—if they have the technology to manipulate the data.
Global Finance: What constitutes innovation in the FX space right now?
Nabicht: Innovation in the FX space is in transit. It used to be, “How do we get access to liquidity?” Now that people have access to all that liquidity, they can see all the prices and trade throughout the world on their desktop. The issue is that everyone’s network is getting more saturated with data.
This is not a bad thing. This is actually a very good thing. There is going to be a lot of innovation in data-processing systems, data analytics systems, making it easier to visualize what’s happening. That’s what’s allowing people to apply their own in-house analytics, put their own spot down, and say, “How do I get better at trading now that I am connected everywhere?”
GF: So how do you get better at it?
Nabicht: If you do the same thing everyone else does, you’ll just be like everyone else. So you need to have control over analyzing the data and connecting to all the venues where the data is coming from. If there is just one venue you are not connecting to, you don’t know if you got the best price or not.
GF: How can you differentiate?
Nabicht: Let’s be honest. Capturing data and archiving data—and giving some base analytics on top of it that are kind of canned analytics—are just the ante. That is what you have to put on the table to play in the game. That’s what network data acquisition (NDA) is.
GF: What’s the next level of innovation?
Nabicht: An automatic programming interface (API). It sits on your network, gathers your data, categorizes it and makes it available to you. Most APIs allow you to access your data at the end of the day, the end of the week, or the end of the month. All too often, people want you to access their data through a very limited dashboard or a series of canned reports. But for you to really get better at what you do, you need to use the data the way you want to, when you want to.
GF: Can you describe a hypothetical use?
Nabicht: Let’s say Joe Average’s job is to make sure business-critical information in FX gets distributed in a timely manner without losing any of the data. Rather than hear a trader tell him, ‘We just lost money,’ he could tell the trader, ‘We are seeing the symptoms of what we saw the last time we lost money, so let’s get out of the market before we lose it.’
GF: How can you do that without getting inundated in data?
Nabicht: We really do live in a flood of data. The trick is not to redistribute the flood and, instead, to distribute highly specialized, highly filtered streams of data so you are not trying to tread water in a flood. After we capture your data, we don’t hold it passively. We loss-lessly distribute the captured data to multiple consumers. We time-stamp at intervals of 30 nanoseconds. No one else does that.
GF: Who are your clients?
Nabicht: We are getting the most traction in FX. Since last September, we have been the capture system of record for Lucera. On the back end, all the data that gets captured and gets pumped into the performance metrics comes from us. Before they used us, they did most of their stuff in-house.