Francois Nembrini, Global Head of Sales and Trading, London Capital Group

FN Head ShotHead of Trading’s Eddie Heaton caught up with  Francois Nembrini, Global Head of Sales and Trading, London Capital Group. 

HoT: Please could you summarise the career path that has brought you to your current position as Global Head of Sales and Trading at London Capital Group?

FN: Sure. I got out of the American University of Paris a long time ago, and my wife was American so we moved to New York and I started as a stockbroker in New York for about a year. Ladenburg Thalmann. Ladenburg Capital, it was, yes. Then I found a job at FXCM which is a currency broker, and I worked through all the ranks there from mostly sales, while I was taking care of the overnight retail desk. Then I moved on to take care of the execution for small CTAs and model traders. Then I moved to the FXCM London office where I was the CEO of the office for a couple of years (2005 to 2010). We were taking care of a lot of money managers, introducers and FXCM franchises across Europe. From 2005 on, I slowly moved on to FXCM Pro, which is the institutional division of FXCM, taking care of banks and hedge funds. When I left FXCM and came here, the idea was to overview sales and trading, and this is how I got into trading. To be fair, a lot of the trading is being handled by Charles-Henri, the owner of the firm, directly. We have a very simple hedging model here, so it’s not very complicated. We have people that are very competent who do some of the more nitty-gritty of the day-to-day trading.

HoT: Could you tell me a little bit about the trading philosophy and strategies at London Capital Group?

FN: Well, we are a market maker and we have installed a system that large investment banks are using. It’s a system called smartTrade. This is one the best system you can buy because you can’t buy most of the top-tier bank systems, but a couple of very high profile banks have developed this system in partnership with smartTrade. We have the capacity to internalise the flow or go to market and hedge the business. We’re a retail aggregator, so our trading strategies are fairly simple. In that sense, we have a market making book where we try to capture the entire spread by matching buyers and sellers. We also have an agency book where we pass through the trade in agency mode and we just basically capture commission on that flow. We separate the flow that we get from clients into those two categories. This is very rudimentary, not very complicated, but with the technology that we have, we can step-by-step increase the complexity of our hedging models, and we’re working to obviously optimise the trading, yes.

HoT: Thank you. How important is your ability to speak French?

FN: I would say zero, but for years I’ve covered French clients so obviously I have a lot of French relationships that are very strong. Aside from being able to speak in French to French traders, there’s not a lot of advantages because everybody speaks English.

HoT:  How much involvement do you have in choosing the trading platforms and other technology for the firm?

FN: Well, I think these are key decisions for any trading house. Obviously, I give my opinion, but in the end it’s the management committee that decides.

HoT: What was your experience of the 2008 crash, and did that experience change your outlook in any way?

FN: That was a very interesting time. We actually made massive amounts of profits during that period simply because the market was very volatile and we were able to capture more flow versus competition because our operations ran the entire time with very little interruption contrary to most brokers. What saved us is that we had multiple central clearers for our systems. This crisis highlighted the fact that having multiple clearers was important. At the time, one of the big clearer was AIG but fortunately for us we also had RBS, so we were one of the only platforms that were back up for all clients in a couple of days after AIG went into bankruptcy, simply because we had a backup prime broker which at the time, not a lot of people did have. I think now, a lot of people have multiple prime brokers to make sure they have a backup solution in case somebody goes bankrupt. I think the lesson is to make sure to be prepared for the worst because it can happen very quickly.

HoT: Absolutely. What impact, if any, are the new regulations having on your day-to-day activities as a Head of Trading?

FN: The new regulations are about best execution for our customers who are mostly retail at the moment. What we have is to do a lot more tracking of where our price came from, why we gave that price and to make sure we give a fair execution to all customers. Those regulations’ impact is in terms of all the work that needs to be done to ensure that you’re treating your customer fairly and that you’re executing them on market prices.

HoT:  How do you see the current Eurozone crisis being resolved?

FN: Well, it’s an interesting question. Honestly, there’s a lot of drama around the crisis, but I just see it as a bit of a show. I think Greece is going to stay in the Eurozone. I don’t see why it wouldn’t. Now, obviously, there are doubts, and if it happens that would be very bad for the Euro. In any case, the position that we’re in, we don’t take a lot of long-term market exposure, but my personal opinion has always been that dollar has been vastly undervalued for the last couple of years. Dollar is coming back strong. Euro is undervalued so now we’re getting more historical fair levels, but I think there’s more room in the downturn of the Euro.

HoT:  Do you think the UK should leave or stay inside the EU?

FN: Maybe on a short-term basis, there are a couple of arguments for the fact that the UK should leave the Euro, not be involved with the rest of the European mess, if you like, but I think over a longer term period the UK needs to stay within the EU and needs to integrate more with the EU because if you look at the world, in terms of demography, you have places like China and India that are becoming more and more relevant, you have a billion people, and they’re catching up. If you’re 60 million, by yourself you’ll be completely irrelevant. As a group, as 300 million-strong, we are the biggest economy in the world at the moment, you have more influence and you can decide how the world is going to go. The idea of retrenching, to me, is stupidity, and the UK needs compromise with the Europeans. I think the UK will have a better time trying to compromise with the French or Germans, rather than trying to deal with the Chinese on their own. That’s my long-term opinion on the subject. I understand there are a lot of frustrations for the UK government and UK population regarding the Eurozone, but going a step back will be, in my opinion, a mistake for the UK.

HoT: Thanks. Can you tell me a little bit about yourself and what you like to do in your spare time?

FN: I’m definitely French in that aspect. I really like going for lunch and drinking good wines. That’s about it. The rest of the time I’m more or less glued to my chair doing emails and sorting trading-related problems.

HoT: Excellent. Thank you very much.