News

'The Banks Almost Forgot They Had Customers'

Xignite

Article by Samantha Sharf

Late last month I moderated a panel at the TradersExpo, a three day conference hosted by MoneyShow to bring active traders together mostly to learn about and discuss strategy. Our panel featured three companies from FORBES’ Fintech 50 list—IEX, Motif and Xignite—and focused not on techniques for trading, but on the future of trading.

A nice thing about getting representatives from these particular companies together is that they are not competitors. Each one is tackling a different piece of the trading process and trying to improve it.

Xignite organizes and packages financial market data for more than 1,000 financial companies to use in their apps and websites. Motif invites investors to design, share and buy themed ETF-like portfolios of stocks. And IEX aims to makes the hidden process after an investors hits buy or sell more equitable by inserting a “speed bump.”

What follows is a, lightly edited, snippet from that conversation. About halfway through the hour-long panel I asked about fractional share trading, which makes it possible to take a position in a stock without buying a full share or a whole number of shares. After some talk on the logistics of this, the discussion seamlessly turned to disruption more broadly, why big banks have largely failed to innovate and signs of an emerging true between finance incumbents and fintech startups.

Stephane Dubois, founder & CEO, Xignite: What the industry has done over the last few years is really lower the cost, lower the friction around investment. Ask yourself, why didn’t the big Wall Street firms invent fractional shares? It used to be you’ve got investment advisors managing your account, otherwise it was all just self-directed. These were the two poles you could choose from, there was nothing in the middle. Now what we are seeing are tons of new companies, Motif and others, innovating, using fractional shares and trying to do zero cost trading.

But why did that happen? What we have seen, as a provider to the fintech players, is that post-mortgage crisis, post-2008 the banks almost forgot they had customers. They have been buried in regulation, they have been focused on all the things the regulators force them to do and thy stopped innovating, whether it was the front end services they provide their clients or the type of technology they offered. It was still high cost, therefore [the thinking was] “I can only service people who have a lot of money in their accounts via advisors.” Meanwhile, they opened a huge avenue to Hardeep and other guys in Silicon Valley or New York or London to invent a lot of this. This is why it is coming from Silicon Valley. It is about cost and friction.

Hardeep Walia, founder & CEO, Motif Investing: It is. To give some credit to the big firms, and not just because they are investors in our company, it is hard to move a tanker. It’s the classic innovators dilemma, how do we go in? There have been innovations in the past, but think about it, if a traditional online broker were to offer what we do—30 stocks for the price of one, or 33-cents a stock ticker—they wouldn’t be in business. [Motif charges $9.95 for baskets of up to 30 stocks, $4.95 to trade individual stocks.]

You see this across technology, with the move to the cloud, all of these things shake up the economics. What drives a lot of the change is that most people don’t know that your typical online broker makes more money holding your cash than from trading. E-Trade, 68% of their revenue comes from holding cash, very little of it comes from trading [double checked this, in the most recent quarter E*Trade earned 63% of its revenue from operating interest income, 22% from commissions]. A lot of the models of investing are changing very dramatically. Nobody out there can make money at 33-cents a stock ticker, we do. That’s the part that’s changing.

For the big guys, they have advantages of scale. Unlike Uber challenging the taxi industry, Wall Street is very smart. They know what they want to do and they actually want to participate in this. That is why they invest in our company. They have the challenge of an incumbency. When you are very very big it is hard to move and innovate fast enough. But it’s happening, you’re seeing now more and more and more that this is a very different scenario than the traditional David versus Goliath where a small tech startup goes in [and defeats the big guy].

The big guys get it, which is something most people don’t realize. They see what their role is. You see Jamie Dimon [CEO of JP Morgan Chase] writing in his letter: “Silicon Valley is coming.” Silicon Valley is coming. The question is what do you do about it? That is the part that is going to be interesting, to see what happens as we work together and figure out new models. This is not an industry that is fighting change, at some level they’ve got to figure out how to transition to this new model.

Laurence Latimer, venture strategist, IEX Group: Let me add, I would say some parts of the industry are not fighting change, other parts of the industry are fighting change. One of the things that has been most relevant for us as an exchange is getting to understand the transparency that happens once you press go. When you send your order down through your retail account there are a lot of way that the trade and the information you put in that trade can be utilized by your brokerage and other downstream participants. If you follow the money, particularly for larger incumbents there is a reluctance to get too far ahead of the curve because it strikes at the heart of their business models. Startups are bringing the types of transparency and options particularly at retail but also at the institutional level to make smarter decisions about the information they get, how they trade and also what happens after they hit go on that trade.

Walia: Is part of that the fact they don’t see that? How do you then get people to care?

LL: Yes, exactly. You’re talking about 33-cents a trade, what you are seeing on the retail side is that 33-cents. You’re not seeing everything that is happening to your order that your broker dealer is facilitating. They are making money somehow. On the consumer side, many of us may have a Google account, a Gmail account. We think about it as free but it is not free. If you look at the advertising revenue Google gets globally each user is about $24, $25 to Google each year. In this case you are the product. For many of your broker dealers on the retail side you are also the product, your order is their product and they are making money somehow. Part of what IEX is trying to do is make sure that there is increased visibility and increased transparency around what happens after you press go. It is a very small time frame that is considered real time, but a lot can happen in real time that is not necessarily to your benefit.

Source: Forbes

RECENT NEWS

Xignite, Inc., a provider of market data distribution and management solutions for financial services and technology companies, today revealed the results of its collaboration with Neeva, the world’s first ad-free, private subscription search engine. Neeva has built features to deliver information in a more user-friendly manner to a general audience. One new feature is a stock tracker, enabling users to look at stock prices based on different time intervals and other key data points. The stock tracker is powered by Xignite financial data. Click HERE to download the case study containing the full results.

Neeva’s stock tracker requires significant quantities of high-quality market data to function. The company initially enlisted a legacy data provider but quickly ran into issues with data and API quality. Neeva needed to integrate quickly and required fast and reliable financial data. After a trial and receiving a recommendation from another client, Neeva identified Xignite as a provider capable of delivering large quantities of market data in a comprehensive and developer-friendly manner. 

“We were impressed by Xignite and committed to them following a successful trial,” said Stephanie Chang, Head of Marketing at Neeva. “The main factors that drew us to Xignite were the consistency of their stock ticker coverage and the granularity of their time-series ticker data, as well as the speed and reliability as well as the speed and reliability of their API,” added Chang.

Integration of the Xignite financial data APIs into Neeva’s stock widget took less than two weeks, and Neeva noticed immediate results in terms of breadth, detail, and API quality. Powered by Xignite’s global quotes and global historical APIs. Neeva presents its users with rich and desirable views of key data points for a huge variety of stocks. Users can use a time-based filtration mechanism to drill into metrics like open price, daily highs, and lows, 52-week highs and lows, volume, and market cap. 

“Xignite’s vision is to Make Market Data Easy. With our industry leading technology combined with Neeva’s user friendly search engine we have done just that,” said Stephane Dubois, CEO and Founder of Xignite. “We look forward to continuing our work with Neeva as they disrupt the search engine marketplace.” 

About Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2006, when it introduced the first commercial REST API. Since then, Xignite has been continually refining its technology to help fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs and leverage a suite of specialized microservices to build efficient and cost-effective enterprise data management solutions. Visit http://www.xignite.com or follow on Twitter @xignite

About Neeva

Neeva is the world’s first ad-free, private subscription search engine. Neeva focuses entirely on the consumer, delivering only real, high-quality, trustworthy results. Neeva blocks third-party website trackers and will never sell or share customer data with any third party, especially advertisers. Neeva also makes it easy to search within personal email accounts, calendars, and cloud storage platforms surfacing the most important information from the same familiar search box. Neeva was founded by former executives from Google and YouTube. Learn more and sign up at Neeva.com.

07/15/2021

Xignite, Inc., a provider of market data distribution and management solutions for financial services and technology companies, announced today it has enhanced the data coverage for its’ interbanks and interest rates APIs in preparation for the required transition from the London Interbank Offered Rate (LIBOR) benchmark interest rate at the end of 2021.

Used in financial products such as adjustable-rate mortgages, consumer loans, credit cards and derivatives, LIBOR has been the world's most widely used benchmark for short-term rates. But after the 2008 financial crisis the U.S. Federal Reserve recommended a new benchmark interest rate to replace the outdated and problematic LIBOR. In the U.S market the new benchmark is Secured Overnight Funding Rate (SOFR), which is based on transactions in the U.S. Treasury repurchase, or repo, market, where banks and investors borrow or lend Treasuries overnight. Other countries are introducing their own local-currency-denominated alternative reference rates for short-term lending.

Xignite banking, and Fintech customers that build apps for capital markets, investment management, financing, and foreign currency exchange purposes, require interbank and interest rates data to manage exchange and interest rate risk. Xignite enhanced its Interbanks and Rates APIs with SOFR earlier this year and has now added four of the alternative overnight risk-free rates (RFRs) recommended to replace LIBOR for currencies in respective markets. The new rates include Euro Short-Term Rate (ESTR), Swiss Reference Rates (SARON), Sterling Overnight Index Average (SONIA), and Tokyo Overnight Average Rate (TONAR). These additional rates are available now at no additional cost to customers.

“Our rates and InterBanks APIs were the first REST APIs ever released to serve the needs of the lending and banking industries. They uniquely aggregate rates that are used by dozens of firms globally in critical business processes,” said Vijay Choudhary, Vice President of Product Management for Xignite “Given the major shift the industry is experiencing regarding reference rates, it was critical for us to support those new rates to give our clients the data they need to run their businesses,” added Choudhary.

Xignite’s Interbanks API offers real-time and historical interbank and deposit rates for currencies in 40 countries. Xignite’s Interest Rates API provides interest rate data for over 600 global treasury, money market and private capital market instruments and benchmarks. The new alternative T+1 (24hr+ delayed) rates include:

  •         Europe: Euro Short-Term Rate (ESTR) is an interest rate benchmark that reflects the overnight borrowing costs of banks within the eurozone. The rate is calculated and published by the European Central Bank.
  •         Switzerland: Swiss Reference Rates (SARON) represents the overnight interest rate of the secured money market for Swiss francs (CHF). The rate is calculated and published by SIX.
  •         United Kingdom: Sterling Overnight Index Average (SONIA) is the effective overnight interest rate paid by banks for unsecured transactions in the British sterling.
  •         Japan: Tokyo Overnight Average Rate (TONAR) is an unsecured interbank overnight interest rate and reference rate for the Japanese yen. The rate is calculated and published by the Bank of Japan.

About Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2006, when it introduced the first commercial REST API. Since then, Xignite has been continually refining its technology to help fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs and leverage a suite of specialized microservices to build efficient and cost-effective enterprise data management solutions. Visit http://www.xignite.com or follow on Twitter @xignite.

06/09/2021

Xignite, Inc., a provider of cloud-based market data distribution and management solutions for financial services and technology companies, today introduced XigniteGlobalCorporateActions, a new advanced API providing detailed corporate actions data for events such as stock splits, dividends, mergers, and spinoffs. The COVID-19 pandemic has led to a dramatic increase in corporate actions, annual meetings canceled, dividend payouts suspensions, and an accelerated company mergers and acquisitions rate. Knowing when a company plans to offer a split or undertake an acquisition is critical for buy-side and sell-side firms.

Corporate action processing is one of the “last frontiers of pain” for investment management, and one of the most manual and complex parts of back-office operations. The lack of uniformity and standards makes it difficult to identify and interpret information correctly. Obtaining accurate and timely information is challenging, and errors can result in painful financial losses. The XigniteGlobalCorporateActions is the first cloud-based REST API to eliminate the pains and complexity caused by legacy data feed and files. The API provides a single-source data stream with consistent information gathered from more than 190 exchanges and over 30,000 U.S. mutual funds.

The recent split of TSLA and AAPL stock on the same day illustrates the complex and far-reaching impact of corporate actions. If a firm does not do this correctly, it will show on historical charts, and their customers will notice. Xignite’s Data Quality team cross-validates our corporate actions data across sources and proactively detects and fixes any missing information. This prevents missing issues such as the TSLA and AAPL splits.

“The industry is facing a ‘perfect storm’”, says Vijay Choudhary, Vice President of Product Management for Xignite. “On one hand you have a massive wave of corporate actions fueled by the pandemic and the rising markets, and on the other you have millions of new retail investors eyeballing their investment applications all day long. One bad corporate action can send your customer service department into a tailspin,” added Choudhary. Additional detail on the Corporate Actions API endpoints:

GetDistributions - Returns cash and stock dividends as declared by the company for a requested security and date range.

GetDistributionsByExchange - Returns cash and stock dividends as declared by the company for a requested exchange and date.

GetEventSummaries - Provides a high-level overview of events for a requested security and date range.

GetMergers - Returns merger events for a given identifier and date range.

GetSpinoffs - Returns spinoff events for a given identifier and date range.

GetSplits - Returns the stock split history for a security for a specified date range.

GetTakeovers - Returns takeover events for a given identifier and date range.

Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2006 when it introduced the first commercial REST API. Since then, Xignite has been continually refining its technology to help fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs and leverage specialized microservices-delivered modules to build efficient and cost-effective enterprise data management solutions. Visit http://www.xignite.com or follow on Twitter @xignite

05/18/2021