Interview with Paul Lambert, CEO NCFX, by Colin Lambert at “The Full FX

New Blood Brings New Approach at New Change FX – 3 new hires at NCFX

Paul Lambert has joined the firm as CEO, replacing co-founder and CEO Andy Woolmer, who is taking on the role of executive chairman. “These changes reflect our desire to continue to be the market leading independent TCA and data provider to the FX industry,” Woolmer says. “We have focused on strengthening our regulatory and technology skills to build products that will shape the future of the FX industry. FX has remained a largely manual industry, particularly on the buy-side, and the opportunities presented by technology are now significant. We will offer clients innovative tools to help them reduce costs and manage FX exposures automatically and efficiently.”


Although Lambert started his career on the sell side, with FX and strategy roles at the UBS and Citi, in addition to two years at the Bank of England, since 2000 he has worked on the buy side, including head of currency roles at Deutsche Asset Management, UBS Asset Management and Insight Asset Management. He also spent six years at hedge fund Polar Capital as principal.


“I think there is a real opportunity at New Change,” Lambert says. “It provides a really important service to the industry in terms of offering the best reflection of where the price actually is at any given time because it looks right across the market rather than have a partial view.


“The forward curve – broken dates especially – is valuable,” he continues. “New Change FX is the only provider to properly estimate the curve and its shape across broken dates, that’s really important.”


Lambert observes that a real challenge with many TCA offerings is that they are, thanks to regulatory changes in recent years, backward looking. “This makes TCA a cost that offers no benefit to the bottom line,” he says. “Too many people think of TCA as a regulatory tick box and a marketing opportunity for their clients, and therefore it doesn’t actually matter if the data you are measuring yourself against isn’t very good. If, however, you want to do pre-trade analysis, something that will change the way you trade, then the quality of your data matters a lot.”


While the core NCFX services will remain, indeed be enhanced, Lambert sees an opportunity to enhance the firm’s technology offering, which means building resources. Once this is done, how NCFX engages with the industry will become equally important, hence the two other senior hires the firm has made.


Also joining New Change FX are James Anderson as the firm’s new CTO – he joins from the UK regulator the Financial Conduct Authority (FCA) where he was also CTO – and Ingrid Vogel, as COO. Vogel has worked for the last 16 years at Deutsche Börse and Eurex in senior management and business strategy roles.


“If we are going to change how people use data to enhance their trading, we need to build our own resources, hence why we have hired James,” says Lambert. “James understands this space really well and we wanted to hire the very best person we could hire, which is what we think we have done. He is building out the technology team to add to the existing resources.


“We also needed someone to help us with the strategy and how we approach the market, which is where Ingrid comes in, someone I have known for a long while,” he adds. “Ingrid has deep experience of building a business, she has worked at Harvard Business School writing case studies as well so she has that blend of management and strategic thinking that will help us.”


As part of the changes, Vogel is joining as a director of NCFX, meaning Peter Harwood can step down from his position to focus fully on his role running the sales business of the firm.


Redressing Imbalances


One of the key drivers of Lambert’s ambition for NXFC is to redress what he sees as an information imbalance between. Buy and sell side. “Technology and analysis have got to the point where the information asymmetry between sell and buy side has grown again,” he argues. “Regulatory changes have meant that where the sell side used to share some information with clients – and there was an asymmetry there that it is good they have taken away – now, they don’t share it, which means the advantage has actually grown.


“Part of what we want to do as an element of the build out is redress that imbalance,” he adds. “New Change FX will be a buy side firm for the buy side, we are not going to be sharing data with anyone on the sell side because we don’t see that as benefitting the buy side, and our governance framework will reflect that.”


Lambert sees NCFX’ independence as a real benefit, observing there is no conflict of interest with a trading arm or ownership, and stresses, “That’s why the governance around what we are going to do is important, it is about improving the outcome for clients, it’s not an information gathering and selling opportunity.”


The firm will offer peer analysis, he says, but this is very much aimed at helping the buy side focus their provider panels and creating better liquidity frameworks. “This will be a closed network, its only open to our buy side clients,” Lambert reiterates.




While NCFX’ post-trade analysis offerings will continue to be offered, the firm is going to add another layer to its service in pre-trade analysis. Lambert says the firm has already started work and the results are “illuminating and, we think, different to what everyone else has in the market, because we have a better benchmark”. And as he points out, “If you are going to change how you act, the decision-making process to make that change has to be based upon you knowing where the market is.”


Interestingly, part of the early findings Lambert says the company’s work has realised, offers an opportunity to deliver pre-trade analysis that takes a different approach to the current mainstream thinking when it comes to algos. “There are times when an algo isn’t the best way to approach the market, but clients are rarely offered that analysis because the provider has an interest in selling the algo,” he explains. “We want to put more information into the hands of the buy side, because at the moment they are paying to use an algo that pushes the market risk to them. There are times when an algo is absolutely the right way to trade, but not always, and that’s the type of information we want to provide to our clients.


“Our holistic approach, using analysis derived from the right price, means we are able to help our clients think about how they interact with the market and every aspect of their execution, such as market impact, which can often be overlooked,” he adds.


Delivering pre-trade analytics involves, naturally, the user experience, so a key aaspect of Anderson’s work, Lambert says, will be to deliver a new user interface. There will be no rush to market, however, as Lambert observes, “You need to get it right before you go to clients, you rarely get a second chance if you deliver a less than positive experience.”


By adding pre-trade analysis, NCFX is hoping to connect the feedback loop that the UK’s FCA for one, says should exist, between TCA and the way a firm trades. “This feedback loop rarely exists because there aren’t many tools offered that can provide it,” suggests Lambert. “Mostly the offerings provide historical analysis that tells a client one LP does a good job here and another maybe doesn’t.”


So as NCFX approaches its tenth anniversary since incorporation, it is undertaking probably the biggest programme of change in its existence. The firm has established itself in the benchmark data business and now it seeks to leverage that work, with a new management team, working closely with the previous regime.


Lambert is unequivocal in his ambition for the firm, noting, “The mission here at New Change is to provide the best and unbiased measure of where the market is, and get that adopted across as much of the market as we can to make it the benchmark. We also want to put on peoples’ desks a properly interpolated forward curve – it’s not just a straight line – using proper data.


“We want to use our unique position to build a platform with a better user experience that is further enhanced with new tools around pre-trade TCA,” he continues. “This will take things to the next level to enable clients to approach the market in a more informed way.”