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CEO CHAT: BSO’s Ourabah Says Frontier Trading Is Worth the Effort
Traders Magazine Online News, May 18, 2017
While space might be the final frontier, equities traders are looking to Terra Firma for their next alpha generating execution and need look no further than the emerging markets.
In a conversation with Traders Magazine, CEO Michael Ourabah of BSO, a connectivity provider for high-frequency traders looking to trade in emerging markets, discussed the merits of trading in less developed markets and countries.
Trading in frontier or less-developed equity markets certainly has its share of attention lately as the buy-side has seen profit margins and alpha dropping lower and lower in all the established markets, both in North America and Western Europe. And the frontier markets, such as sub-Sahara Africa, the Middle East or even parts of Asia have a significant draw.
“Clearly, the buy-side has been looking to get more alpha and emerging markets are a major draw. But going into the emerging market has a cost, and if you do it in the wrong way, it can spell disaster,” Ourabah began. “Also, there are a lot of regulatory constraints - issues for deploying technologies and resources. So, we help enable the buy-side by having done all the technological work required in these areas over the past 10 years. We’ve built what we feel are the absolute lowest latency paths and infrastructure to get them trading in these geographies.”
But still, getting a buy-side trader going requires a certain je ne sais quoi’ depending on the jurisdiction they are looking to enter and BSO feels it has just the right touch to help. As Ourabah told Traders Magazine, some locales such as India, the Middle East, Istanbul and South Africa can all tax a trader’s patience, but BSO’s longstanding relationships within these markets can smooth the way.
“All these markets are not easy to trade in and there are a lot of constraints around the regulatory environment, but we have a lot of insight and experience with these issues,” he continued. “Normally we help them get in there from a trading and investiture aspect, but we also connect them with our local partners who we know can help facilitate their market entry.”
Ourabah explained that buy-siders need to be patient when trading in some of these jurisdictions as country-specific regulations affect how to collect earned alpha – namely getting money from the frontier country to the buy-sider’s office. Some countries require monies earned to remain within the country for a time, or be reinvested within the country to ensure no speculation or currency drain.
“It can be a struggle to get money out,“ Ourabah said, recalling some of his clients’ travails. “They definitely do, but how this is done is a mystery to me!”
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