DMALINK is an established independent electronic price discovery and execution venue for professional traders with a particular focus on Emerging Markets FX. Recently, the firm launched DeFinity Markets, a custody-agnostic institutional digital asset ECN. Both firms have been rapidly growing market share so we asked Michael Siwek, Founder and Global Head of Sales, to tell us more.
An e-Forex Cover Story Interview
What types of firms are utilising your solutions and what are they are looking for from your platform?
Platform participants include funds, asset managers, proprietary trading houses and banks transacting cash FX and precious metals regularly using our central counterparty clearing and settlement model underpinned by Natwest Markets. We are also actively pushing into the corporate client space by offering innovative boutique-style credit solutions. Clients can use the DMALINK platform for cash FX and precious metals execution, reporting, analytics and TCA benchmarking.
Please tell us about your market coverage and the benefits of DMALINK’s approach to liquidity provision.
DMALINK provides access to liquidity across 28 base currencies in the FX Spot market with a strong capability to fill trades across CLS and non-CLS currencies in large tickets and during times of market volatility. All trades are matched and booked by industry-standard straight-through-processing (STP) back-office systems.
The DMALINK model is multi-lateral, meaning all market participants can access the liquidity of and trade with all participants on a non-disclosed basis. All transactions are cleared through our central clearing counterparty Natwest Markets, which can match any buyer with any seller, creating a true client-to-client trading experience.
The DMALINK approach to liquidity is agnostic. We work closely with liquidity providers and price takers to create customised liquidity pools based on trading style, location, currency coverage and trade size. Liquidity providers and takers are matched accordingly, optimizing fill rates while minimizing rejection rates.
What do clients value most about DMALINK in this highly competitive industry?
Recent developments suggest a push towards the co-existence of traditional and digital currencies, including ongoing government effort towards central bank digital currencies (CBDC). As such, we see an increase in client demand to bridge the gap between “old and new money”.
Clients value our ability to offer access to both worlds where they can execute, track and store their fiat and digital assets using DMALINK and DeFinity ecosystems. The add-on flexibility of a custody-agnostic venue with support for known protocols such as FIX gives our institutional clients the required comfort to meet ongoing market demand. We believe the key to value is innovation through technology and rapid adaptation of new methods of transacting, clearing, and settling trades.
DeFinity recently recorded the world’s first live cash FX trade to its permissionless layer-1 blockchain. Why is this a game-changer for the industry?
Embracing new technologies is critical for any industry. When considering the OTC FX market, it offers many advantages over other asset classes. However, there are certain drawbacks such as price opaqueness, lack of uniform trading standards, and no impactful reporting requirements for cash FX products. As markets evolve, clients, venues, and regulators will welcome transparency across the trade cycle’s operational, transactional, and analytical aspects.
Our layer-1 blockchain provides a platform for regulatory requirements and best practice standards.
From an operational perspective, buy-side and sell-side firms can use our technology to effortlessly establish the actual execution cost and share the information with third parties. All counterparties can elect to record their transactions to our permissionless or permissioned ledger.
Last year was an exceptionally busy one for DMALINK. What were the key highlights for you?
Absolutely. To expand the eFX offering, we have integrated with Traiana’s Netlink product to support trade aggregation services for our clients. This product is being gradually rolled out across new platform participants, helping to reduce transaction costs and improve reporting of trades.
Nomura has joined DMALINK in anticipation of our Singapore data center go-live across cash FX and NDFs.
We partnered with Axyon AI adding deep learning artificial intelligence models to the platform, soon available as algos to bank and buy-side clients.
In line with our planned emerging markets expansion, we have partnered with the Financial Markets Association Russia to facilitate deep access to Russian Ruble (RUB) liquidity for our clients.
Finally, we have been working on our Cobalt partnership across our digital product suite of the DeFinity platform, offering clients institutional custody and execution services.
What is DMALINK going to be focused on in 2022 in terms of further product development and business growth?
The key focus in 2022 will be to interconnect DeFinity further with the DMALINK platform offering clients seamless access to eFX and digital asset execution, reporting, and settlement services underpinned by our proprietary layer-1 blockchain optimised by deep learning artificial intelligence.