Spectrum: A step up for retail investors trading on venue

SRP caught up with the firm’s chief executive Nicky Maan (pictured) to discuss the reasons behind the successful launch and his plans to establish Spectrum as the ‘go to’ platform for self-directed investors in Europe.

The numbers at a headline level are “very encouraging” and provide a “genuine corroboration” that the new entrant’s philosophy and place in the market can be developed further.

“That’s what we were hoping for, but obviously you’ll never know until the product is launched,” says Maan. “Beneath the headline numbers, the thing to pick up is bringing the market infrastructure from a traditional institutional base primarily to retail clients. And one of the key ways in which we did that has been the 24/5 concept. I think over a third of our trades are done out of market hours. That really shows that designing such an infrastructure for the retail client is starting to show in statistics as well.”

What we tried to do is to bring what is a traditional model of trading on venue for securitised product and sharpen it for the retail client

Maan believes that retail investors seen as traders are not always restricted by the market hours of institutions. “The typical retail investor is a successful professional, with a job, family life, and turns their mind to trading around when he/she has some time to trade – which is often late at night,” he says, adding, “until that time they are busy with life”.

“What we tried to do is to bring what is a traditional model of trading on venue for securitised product and sharpen it for the retail client,” says Maan. “That’s shown by this overnight trading.”

At the moment, Spectrum offers exclusively the Turbos24 range - a suite of turbo warrants on currency pairs, indices and commodities but the platform is preparing to include longer term products and onboard new issuers and product manufacturers too.

The Bafin-regulated MTF will continue to pool liquidity from across Europe in the products being traded on its venue to achieve deeper liquidity creating fairer prices but with a focus on one of the facets of its philosophy - to keep a lean product range for its retail clients.

“We are not interested in having hundreds of thousands products that are stuck there like on other traditional exchanges, clients get confused, and they do not trade outside the primary underlyings,” Maan says. “They don’t trade much more than that and you don’t need so many products to cover the needs of investors.”

Maan wants to shape Spectrum’s future as a market place with a full offering including short-, medium- and long-term investment ambitions.

Efficiency

“What we have at the moment is short-term trading and we want to add medium to long-term products, and different types of products that allow retail clients to do an investment for a day or two, but also for six months, and for multiple years,” he says. “The goal is to have the products that cover those needs, by retail clients in Europe, but not at the expense of having every single product on Spectrum for the sake of it.”

The German exchanges are listing in the 1000s every day whilst Spectrum offers 20 underlyings on its platform.

“We will develop until the end of the year single stock equities on turbos maybe some more underlyings but we will cover up to 90% of trading on those asset classes following the implementation of single stock equities,” says Maan. “We are open to all types of structured products, warrants, certificates, reverse convertibles, all types of structured products. But again I would like to encourage the amount of products on Spectrum to really fit a need.

“We will always look at products that clients want to trade. We want to build a solid base for the traditional products that people want to trade all the time.”

There is also scope to look at this kind of products and improve the processes such as intra-day trading. “If we can list in one day then you will be able to deal with all the trendy products,” says Maan. “[However,] we are not going to follow every trend because we don’t want 1,000,000 products on the platform but if there is something retail clients want to trade, we will create it.”

With over 1.7 million turbo24s traded, and volumes increasing by over 50% week-on-week the platform reported that the flow of trading so far has been evenly spread across European countries. Seventy-eight percent of Spectrum’s flow to date has been on indices, but all of the 20 underlyings currently on the venue have seen trading. The product most traded on Spectrum has been turbo24s on the Dow Jones, followed by turbo24s on the Dax.