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StreetsTalksTo Exberry

In this episode of StreetsTalksTo we are joined by Erez Zada, CEO and Magnus Almqvist, Head of Exchange Development for Exberry. Exberry helps exchange pioneers, at all levels & of all sizes, to launch, pivot, break ground and scale. They deliver a blend of exchange and trading technology expertise for secondary market models, creating matching engines in the cloud at speed for traditional, alternative and digital asset exchanges. During the podcast we delve into the challenges and opportunities that exchanges are facing in the current environment, and the importance of supporting the real economy in order to improve liquidity. We talk about the struggle with legacy technology and how it is an exciting time for innovation and creativity with entrepreneurs finding new ways of uncovering investment opportunities, particularly when it comes to the digital or tokenized world. There is general acceptance that digital is the future and the dream to achieve low latency based on the cloud is now a reality thanks to firms like Exberry. 

Erez Zada

With over 25 years of experience in Managing and operating technology and fintech companies, Erez took the lead on Exberry, and is working together with the team to offer a cutting-edge technical solution that will break the monarch of legacy technology companies in the exchange world. After completing his service in the Israel Defense Forces Computer Unit (MAMRAM) as Staff Sergeant, squad leader, Mr. Zada obtained a BA in Computer Science and an MBA from Tel Aviv University. Erez filled a variety of technical positions, operational and leading managerial positions in the Israeli high tech landscape.

Magnus Almqvist

As Exberry’s Head of Exchange Development, Magnus builds and nourishes contacts with exchange pioneers around the globe with over 20 years' experience behind him. With a background as Head of Sales, Aquis Exchange, Senior Business Development Manager at FIS (SunGard) and prior to that heading up Smarts Group’s (part of NASDAQ OMX) London office, and as the CTO of the London Stock Exchange Group Company EDX, Magnus has a solid understanding of capital markets exchanges, their ecosystem and their evolving universe. Swedish- born Magnus holds a masters’ degree in electrical engineering from Stockholm’s Royal Institute of Technology and has extensive knowledge and experience in both the market surveillance technology and matching engine space

Transcript

Julia: Hello. My name is Julia Streets, and welcome to the podcast series, StreetsTalksTo.

In each episode, I’ll be interviewing CEOs from some of the most influential firms, bodies, and initiatives in the financial services industry. As every CEO will testify, one of the critical factors of success lies in the strength of the team, so on each episode, we invite the CEO to bring along a colleague and together we’ll be looking at what’s at the very forefront of innovation and change. We’ll be thinking about the challenges facing their clients and the industry at large, and uncovering the opportunities that exist both today, and as we look ahead, particularly as we navigate these extraordinary times. I hope you enjoy the series, which you can find on all good podcast channels, and all the episodes are listed on our website streetsconsulting.com. Thank you for listening.

Welcome to StreetsTalksTo Exberry. Before we get into the conversation, allow me to tell you a little bit about Exberry. Exberry helps exchange pioneers launch pivots, break ground and scale, and unlike any other technology provider, Exberry delivers a blend of exchange and trading technology expertise for secondary market models. It’s a combination of entrepreneurial pedigree and also corporate strength, more on that later. The technology could be used to solve the thorny issue of price discovery in alternative markets. Essentially it’s about creating matching engines in the cloud at speed for traditional alternative and digital asset exchanges, and I’m delighted today to be joined by the CEO and the Head of Exchange Development. The CEO is Erez Zada, who has over 25 years of experience in managing and operating technology in FinTech companies. He took the lead on Exberry and is working together with a team to offer a cutting-edge technical solution that will break the monarch of legacy technology companies in the exchange world. Erez, wonderful to have you join us. How are you?

Erez: Good, Julia. Great to be here.

Julia: We’re delighted that Erez, CEO, is joined today by his Head of Exchange Development, Magnus Almqvist. As the Head of Exchange Development, Magnus builds and nourishes contacts with exchange pioneers around the globe, and he has more than 20 years of experience behind him. His background was Head of Sales at Aquis Exchange. He was Senior Business Development Manager at FIS, also known as SunGard, And prior to that, headed up SMARTS Group, which is part of NASDAQ OMX. Magnus, wonderful you could join us. How are you? Are you well?

Magnus: Thank you. Yes, Julia, I’m doing great, and thank you for having me and Erez. It’s very exciting to be here.

Julia: Pleasure. I’m really, really delighted you could join us, because I think this is fascinating, if you think about the journey into the cloud. I was reflecting in a couple of the opening comments I made at TradeTech this year, which is if you wind back only about eight to ten years, we never talked about cloud and the thought of exchange groups ever contemplating putting their stack in the cloud was unheard-of. It was on-prem or out the door, as I describe it. Before we get into what you do, I am really keen to hear essentially what’s keeping your clients awake at night at the moment and thinking about what are those industry trends and dynamics that they’re paying attention to? Magnus, I’m going to come to you first of all, because I know you’re really close to your customers in the industry as Head of Exchange Development. What are we thinking about?

Magnus: I think we see two distinct different worlds at the moment. If we look at the traditional exchange world, the exchanges that I’m talking to, they suffer from low profitability and a low number of IPOs compared to what they’ve historically seen over the last, say, 15 years or so. They are also experiencing being stuck. They have legacy technology. They have a very high annual technology bill. Projects and change is complicated and takes time. The other world we experience is the digital world or the tokenization world where it’s literally boiling with creativity at the moment. We see new ideas everywhere popping up, very new, exciting, innovative investment opportunities that they want to create and put on a platform. They are suffering from a lack of acceptance or breath, if you like. We keep talking to these people and they launch these exciting ideas, but we’ve yet to find a token that really becomes truly liquid and truly accepted out there. And conversely, I think they suffer from a lack of regulation and a lack of acceptance from the institutional world.

Julia: Erez, does that also chime with your experience of talking to clients and thinking about when you’re running Exberry as an organisation, and responding to industry dynamics?

Erez: Yes, definitely. I see that when we initiated the work on Exberry, we investigated on the market, and we saw that the solutions are quite either expensive and also the technology is quite old and inflexible, and it is hard to keep with the trends of today, as Magnus said, about the availability of new assets that are coming onto the market.

Julia: It’s interesting, isn’t it? Because if I think about the mode du jour that everybody’s talking about at the moment, it’s very much, Magnus, as you said, about tokenization, about digital assets, about alternatives and finding new ways of uncovering investment opportunities, but in a world that is highly regulated and very institutional in its nature. I’m interested to know what’s changing, what’s shifting.

Magnus: A couple of really clear trends, I think, what we observe right now, and one that I personally find very, very positive is that there is an increased acceptance or increasing importance to support the real economy. We’re slightly going back to basics, if you like, where actually it’s about entrepreneurs being able to tap into capital and create new companies and create work for people and actually start producing something that generates income to the real economy. The other important trend, I think, is that there is now a general acceptance that digital is the future. While we’re not there yet, everyone sees that the momentum is there. We’re heading in that direction. A great example is Seedil who now include codes for tokens and central banks are increasingly talking about e-money or the various forms of cryptocurrencies.

Julia: That’s right. The central bank digital currencies. I mean, only this morning, I was chairing a session all about central bank digital currencies. We see various things coming out of China and around the world and much, much more. I love your point about bringing it back to the real economy, because we do ask ourselves sometimes, what are the capital markets truly for? And it is basically about generation of capital in order to fuel the real economy. I think we must never forget that when we talk about primary and secondary markets, for sure. Erez, when we think about some of those very specific requirements and what the capital markets are for, when you talk to clients, what else are they thinking about?

Erez: We’re seeing a trend where entrepreneurs within financial markets are trying to widen access to investment opportunities through digital assets. 

Julia: It’s all about basically generating liquidity and also accessing liquidity is what is in order for secondary market trading, which is fascinating, isn’t it? Because it’s such a nascent market. As well, we know, Magnus, from your time at NASDAQ and also Aquis, liquidity begets liquidity. So it’s at the early stage of this momentum where you are at the moment. But before we run ahead with ourselves about the future state of digital assets, etc, what are you concerned that we might be overlooking? Is there anything that we should be mindful of?

Magnus: We are in the midst of a pandemic, and certainly in some parts of the world, the economy is virtually on a hold and in a poor state. And I think it’s really unfortunate to see that very exciting and innovative new ideas for new types of marketplaces are sometimes being put on hold. Recently I spoke to someone who wanted to make supply chain and deal funding management much simpler and much more accessible to SME-type firms. And sadly they had to put their initiative on hold due to banks just halting all the activity in the economy. That’s sad to see it.

Julia: Well, I think it’d be interesting as we go into 2021, because my gut feeling is we’re seeing a bit of a return to business has to get done, that we have to recognize the way in which we’re working at the moment and that deals must still be done. It’d be fascinating to see to what degree initiatives like that will continue, or in fact, whether people just go, “Well, we’ll do the easy things that have always been done before rather than support or try to do something new as well.”

What I’d really like to get into now, I’ve mentioned in my introductory comments about what you do, which is essentially matching engines at speed in the cloud for traditional and also for new models of secondary markets and exchanges, essentially. Just talk to us a bit about what you’re doing to address some of those challenges that you’ve been talking about.

Magnus: Absolutely, this is why Exberry is so incredibly exciting. So we really do help and support, or can help and support, all of these initiatives that we’re talking to out there. We drastically shortened time to market. Instead of months, or even years, we’re talking days to launch the technology. Of course, you still have to get regulatory approvals and staff and training and get your marketplace in order. But from a technology point of view, we’ve just removed that whole headache. Our engine, it’s flexible, it’s scalable, it’s easily integrated. We provide everything as a service. Anything relating to the size and optimization of your infrastructure and making sure your environment is up and running, we just take all of that headache away from you.

As you mentioned, Julia, it can run in the cloud. It runs really well in the cloud. It’s high volume, low latency. Yes, it is. We integrate with the ledger very easily. They built a PLC with a very famous ledger provider out there. It took less than three weeks. Less than three weeks and it was up and running. It’s mind-blowing. We have a sandbox, play before you pay. I speak to prospects that have actually done a trial integration of their prototype front end with our matching engine, and seeing trades coming back from orders placed on the market without even speaking to us, it’s mind-boggling. So this enables these pioneers, these entrepreneurs out there, be they from a traditional organisation or from a young company trying something new, they can really get to understand us and understand what we can do before even talking to us. Forget the whole thing on paid design studies and long complicated engagement models. Just get started. Just do it. It’s amazing.

Julia: That’s fantastic, isn’t it? And if you think about in the world of alternatives, is how people are trying to bring new models to market as well. Erez, I mean, I can see you smiling while we’re talking as well. He’s itching to get in here.

Erez: Yes, definitely. It always excites me when I can speak about Exberry. I think coming to the market with this amazing technology that allows the entrepreneurs and startups and companies to build their exchange very rapidly, very quickly. If you’re comparing it to, I don’t know, a few months back, it would have taken months to years just to set it up with the high expensive hardware and set-up costs. And now we just cut it really, really low to these companies. And now, even if they only have an idea, then they can just set it up, try it and see if it works. If it works, perfect! We can scale it up, the exchange, to an international great exchange. This is very exciting from Exberry’s side. And again, as Magnus emphasised, that it’s all cloud-related, cloud-based. In the past, it was a long dream to achieve a low latency based on the cloud. We are there already. So it’s quite amazing.

Julia: What really struck me, and I was making this in my introductory comments, is about the pedigree and also the robustness of the group, if you like, because Exberry is part of the OM2 group. When we talk about understanding entrepreneurs, I mean, Erez, you’re involved with many different Fintech initiatives as part of that group as well, which gives some weight behind Exberry being a relatively new startup. Could you share some thoughts on that?

Erez: Yes, definitely. OM2 is a FinTech technological group that has existed for more than 16 years already. We are spread out worldwide and we’re involved in many Fintech startups and companies. We have the background of a technology company, but also we have an investment arm in Fintech startups and companies. If we go to that technology background, then we know to build correctly from the beginning a new product, bringing the entrepreneurial spirit and also the technological know-how, how to do that correctly. I think Exberry wins from both sides, because on the one hand, there was a lot of vision in building Exberry and setting the expectation high for the team. On the other hand, we had the right people on the bus from the technological and business point of view to achieve that.

Julia: Delighted that you’re dialing in from Tel Aviv today. We have Magnus in London. You talked about your clients all over the world as well, and it’s wonderful. The great thing about podcast platforms is we can dial people in to join us as well.

I think one of the most interesting things at the moment is that we talked about coronavirus, and Magnus, you were talking about this earlier, and the impact this has had on not only early-stage businesses, but global organisations. This has affected us around the world. I’m keen to hear, I’ll come to you first, Magnus, actually, to hear about when you’re talking to clients, what this has meant for them. And then I’m going to come to Erez to talk about what it’s meant for Exberry.

Magnus: It’s really interesting. I think it’s helped crystallize minds. First of all, remote working and interacting and talking like this on Zoom is working a whole lot better than people thought it would, I think, me included. In the morning, I’m talking to prospects in Hong Kong. In the afternoon, I’m talking to prospects in Midwest US, and they are serious proper conversations. They’re not just frivolous, and touch wood, I’m about to sign deals with people I’ve never met, but no one finds that strange. It’s absolutely natural. We can build rapport, we can build trust over these remote channels.

I think the climate, my sense is that it speeds up the decision process. It’s either we do it or we don’t do it. It’s either you feel actually this has a place and I believe in it and then you just get on with it, or you just say, “No, not now,” and you park it. I actually find the current climate very invigorating and quite active. The number of leads that we receive through various channels surpasses any of my wildest expectations, and the quality of the dialogue we have with these prospects is much deeper and wider than I thought it would be.

Julia: Some people would argue business has slowed down, the ability to raise capital has slowed down. But actually what you’re saying is that the quality of the leads is better, the intensity of the conversation, and also the appetite to get going, which is wonderful to see. But we can’t also forget that this is organizational change as well, Erez, I’d love to get your thoughts on how has the organization coped with navigating COVID and also looking at the path ahead.

Erez: What we experienced is for the past four years, we are doing the Agile methodology in the development phases. And the core values of the company, one of them, is freedom with the ownership for the teams. This means that they have all of the freedom to do the things that they need to do and how to do it. But of course they are taking full ownership and responsibility on how they are implementing it. This is very strong in Exberry. The team has very senior roles, product and CTOs and VP R&D, that are deciding on the pace of the teams of the product, of the development. And it works perfectly well with the coronavirus now that there is a lockdown, especially in Israel in the last few weeks, and we cannot see and meet each other in the office and all the communications, only online and on Zoom. It helps us very much to deliver a very good product, very good technology,

Julia: And ultimately being incredibly focused as well, which is wonderful to hear. But of course the business, the clients, we all operate the technology, the sandboxes, the innovation, everything we’ve talked about operates in a highly regulated world. I’m really fascinated to think about, if there were a piece of regulation that you’re particularly paying attention to at the moment, and Magnus, let me come to you on this question, which is what are you most talking to your clients about regulatory-wise?

Magnus: It’s a great question, and I have several layers of answers there, I think. I mean, regulation is really important. And again, we come back to these two worlds that we’re facing. Talking in the digital world and the tokenised world is generally they accept that as a really viable asset class and the embracing tendencies steer  from regulators, where they are now including tokens into regulation. We see MTFs and ATSs, for example, being approved that are only offered trading in the digital assets. I think that’s really exciting and fascinating to see. Regulators are incorporating digital assets into existing relations and also creating specific regulation for it. What I do find mind-boggling though, is that in some jurisdictions, the concentration route still exists. It’s the most anti-capital market route there is out there, at the heart of the capital market where liquidity has to exist in one pool.

 

Julia: Just to explain that a little bit more, it basically means that you have to trade domestic stocks on the domestic exchange. Is that correct?

Erez: Yes exactly. That so if you have this great new idea to offer trading cheaper and make it more available and introduce spreads and allow your pension funds to be much more efficient, you’re legally not allowed to do it. So that still exists.

Julia: And that always harks back to these arguably monopolistic cultures of life, pre Chi-Ex, Turquoise, BATS, in equities trading in Europe. And that still goes on around the world. It’d be very interesting to see to what degree that changes in time. 

I’ve really enjoyed this conversation, but I’m keen to point out how people can find you. exberry.io is the website You can find Magnus and Erez on LinkedIn and through the Twitter channel, which is @Exberry3 as well. That’s how you can find out more about Exberry. I’d really like to move on to some closing thoughts, if we may, because it’s extraordinary how time disappears as well. Erez, as you’re looking at the road ahead for the business, for the group, for your clients and for the industry as a whole, love to know what you’re particularly thinking about, and what advice are you giving clients at the moment.

Erez: For Exberry, I’m sure that it will continue to grow. We will bring new clients, on-board them with us, and we’ll continue the roadmap and continue to develop the product. We’re already working with partnerships and building on new partnerships to grow, and hopefully it will be exponentially as we continue. For the clients, what I would recommend is just not to stop because of the coronavirus, and continue with their dreams and with their initiatives, and just contact us and see how can we work together.

Julia: Wonderful. It’s a great call, you can be their partner of dreams. I love that idea, that whole concept. And Magnus, you’re talking to people in the industry all the time, and around the world as well from what you were saying before. What are you particularly thinking about, and what advice do you give your clients?

Erez: My key advice really is to remain flexible. Imagine yourself a dolphin that listens and adapts, swimming around, and you’re surrounded by opportunities and also a continuously changing environment. Don’t lock yourself into some solution or some decision, but whatever you decide to do, make sure you can move and adapt more. And don’t delay your decisions, really. Either you don’t do it, or do it and just go ahead and do it.

Julia: It feels like this is a really fascinating time for the industry. You’ve got new technologies enabled by the cloud, being able to create alternative models at speed, being able to unlock liquidity and potential for the institutional market like never before. It’s going to be very interesting to see how this all plays out as some of those regulations change. Here’s hoping there’ll be a removal of the concentration rule, but how wonderful to hear that business is being done during COVID.

Magnus and Erez, thank you so much for joining me, and to everybody who’s listened to StreetsTalksTo Exberry. Again, you can find them on exberry.io. And Magnus, thanks again for your time. Great to see you.

Magnus: Thank you very much, Julia. Lovely to be here.

Julia: Pleasure. Erez, thank you for joining us from Tel Aviv.

Erez: Thank you very much for having us.

Julia: And to everybody who’s listened, thank you for tuning in. I’m Julia Streets, and this is StreetsTalksTo.

Kieron: This episode of StreetsTalksTo was produced by me, Kieron Yates, on behalf of Streets Consulting Limited. Streets Consulting is a business development, marketing, communications consultancy that’s focused on helping Fintechs from the smallest startup companies to some of the world’s largest global organisations. Everybody’s trying to innovate and everybody’s trying to grow. You can find this episode on Streetsconsulting.com and using the hashtag #StreetsTalksTo. We can be found on LinkedIn and on Twitter at @StreetsConsult. Thanks for listening.