Case Study

R5FX

R5FX offers foreign exchange trading platforms to big global banks as well as to smaller trading outfits. It says London is the ideal location from which to manage its global operations.

We spoke to Jon Vollemeare, CEO at R5FX, about the company’s London base, and what lures Asian businesses to the City. He tells us why top-level support, in addition to the development of the fintech sector, is making London ever more unique and attractive.

What does your company do?

“R5FX is a specialist fintech company that operates as a foreign exchange (FX) trading platform for emerging markets. We mainly facilitate trade in the more restricted currency-controlled markets such as China, India, Turkey, Russia and Brazil. Our clients vary from the big-name global banks through to smaller domestic emerging market financial trading firms. Although we run our operations out of London, we have an office in Singapore and are opening offices in Shanghai and Hong Kong. This reflects our strategic focus on the Chinese market – a crucial and growing market for both R5FX and the UK in general.”

Firstly, why London?

“You can’t get a more international business than foreign exchange trading, especially with over 40% of global daily FX turnover passing through London. So, the City has always been our natural home. As it lies right in the middle of the global day, London is the perfect location – straddling Asia and the Americas. And there are many other benefits, such as English Law, language, and the long-standing trading routes that make London the unique city it is.”

“As it lies right in the middle of the global day, London is the perfect location – straddling Asia and the Americas.”

Given your strong focus on the Chinese market, tell us more about some of the trade opportunities between China and the UK.

“The relationship between the UK and China is getting even stronger. Bilateral trade is growing significantly and is providing increasing opportunity for businesses in both countries. This is no coincidence: governments/official institutions are playing a crucial role in supporting and developing the trade relationship between the two countries, from the Treasury and the Bank of England to the Chinese government.

There has been a lot of focus on developing the infrastructure between the two markets. Official policy has been facilitating this. The R5 Currency Connect program (which operates much like the better-known Stock Connect Program) is providing even stronger links between London and Shanghai – allowing Chinese banks to trade in the global FX market and London participants to deal with onshore Chinese banks.

A new initiative from the UK regulator is the Fintech Bridge which is mutually beneficial to UK and international firms. Firstly, it provides assistance to UK firms setting up in other countries – for example, if they are UK regulated then it means they might be able to get reciprocal regulation in other jurisdictions, such as Australia, Singapore and Hong Kong. It also makes it easier for companies from these jurisdictions to set up when coming to the UK.

In terms of support for Chinese and Asian businesses, there are many institutions, such as the City of London Corporation, that go out of their way to facilitate a move to the UK. But support goes way beyond this. In London, trade with China is viewed as a great economic opportunity rather than a threat (as it might be perceived in other major economies).”

How does the fintech sector make London attractive?

“Some of the benefits of being based in the City are obvious – such as those we mentioned earlier. Yet some of them are more hidden. For example, the overwhelming support provided to the fintech sector is causing London’s highly-regarded financial infrastructure to evolve and further improve. Also R5FX (and countless other firms) have been benefiting from the Enterprise Investment Scheme (EIS): a tax incentive whereby investors are encouraged to invest and support British tech SMEs. This is heightening fintech innovation and creating an unparalleled infrastructure to support all types of businesses.

London is unrivalled in terms of its fintech output. The City boasts unrivalled creativity and innovation. Companies are doing what larger, less agile institutions obviously cannot, which is working out the actual ways to bring counterparties together. Because of the presence of fintech innovation, there is no better place to bring the moving parts of any business or strategy together. In our example, we built an attractive product in London – now we are rolling it out in Asia and beyond.”

How else does having a London base benefit R5FX?

“Cultural exchange is a part of everyday business life in London and it is shaping the City even more. We find that many people that come here to work do not want to leave. Which brings us onto talent: London, for all the reasons mentioned earlier, sustains a unique pool of talent and experience – another key element of the City’s appeal. And with the City’s global standing – economically and geographically – it will remain unrivalled. Opportunity is here for the taking.”

The importance of the fintech sector in supporting international trade highlights a key area that is making London increasingly attractive to Asian firms.”

 

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