INTL FCStone Ltd is developing a technology platform designed for its London Metal Exchange customers as it turns its focus to building out its global metals business following an internal restructuring.
The company’s newly appointed global head of metals Barry Canham told Metal Bulletin in an interview that the technology-led approach for LME clients would be similar to that already adopted for the precious metals unit, which he ran prior to its consolidation with INTL’s base metals business.
“We’ve reinvented our business in precious metals. We spent a lot of time talking to customers – it was very important and probably the key piece of the jigsaw,” he said. “Obviously at the start it wasn’t plain sailing; we went to a couple of dead ends and came back again. But constantly talking to, visiting and understanding customers has created a technology platform that has given ownership of an account back to the customer,” he added.
That platform is PMXecute, a proprietary electronic trading platform providing clients with real-time pricing in both precious metals and foreign exchange. As a participant to the London Bullion Market Association gold auction, INTL customers can now participate directly in the process directly.
The company also operates PMXecute+, a proprietary platform connecting consumers and suppliers of physical gold.
INTL saw a 49% increase in gold ounces traded in fiscal 2017 compared with the prior year and its precious metals division added $2.2 million in operating revenues over the same period. Canham said precious metals are now likely to see a record year in fiscal 2018.
“Around 98% of our precious metals trades, including the gold auction, now have no human intervention – customers are in charge. It sets us apart from our peers and puts us on a level playing field with the banks,” Canham said.
Now the goal is to replicate a technology platform similar to that used by INTL’s precious metals customers for its LME ones. INTL expects the LME-focused platform to be completed within 18 months – it has hired four in-house developers to aid the process – with rollout in stages and its first offering in the first quarter of 2019.
“I see the LME as being where precious metals was three to five years ago,” Canham said.
“We are building our own technology platform for our LME customers, and once again, it will be an all-encompassing platform. We want customers to have complete control of their businesses, to understand their risk and margin limits, to directly see the information,” he added.
INTL recently hired eight people to its LME metals business across offices in New York, London, Hong Kong and Singapore.
The recent hires follow the departure of a number of INTL’s metals personnel over the past several months to join industry peer ED&F Man.
Canham said there are more hires to come, with further additions expected in the next three to six months. “We aim to introduce a really young, enthusiastic technology-minded set of people within INTL,” he added.
These include to the company’s European base as well as in Asia, a region that Canham said “is going to be a particular focus for INTL in the next three years, an area where we see big growth in the LME.”
“We’re not weak there by any means, but maybe we’ve never showed enough interest in Asia… so that’s a market where I see big growth for us,” he added.
Despite the investment in technology, the firm – a Category 1 member of the LME – is “fully committed to the LME floor, and always will be,” Canham said.
“The new platform means we’ll be bringing the business from the customer to the desk in a quicker, more efficient way; the floor business won’t change whatsoever,” he added.
Having recently set up a LME options desk, Canham said the goal is to develop INTL’s metals business into other new areas, including on- and off-warrant financing as well as physical metals trading.
“It goes back to offering the customer the full product-offering of the base metals – a comprehensive client experience, covering multiple products, price discovery, and execution,” he told Metal Bulletin.