Brexit means record trading for OFX

Online foreign exchange group OFX appears to be among the few winners of Friday’s horror show on markets.

Prepared: OFX’s Richard Kimber

Online foreign exchange and payments group OFX appears to be among the few winners of Friday’s horror show on markets, recording record revenue on the day.

The ASX-listed firm (OFX), formerly known as OzForex, said its preparation for an uptick in activity had allowed it to maintain operations through some of the wildest currency trading on record.

Chief executive Richard Kimber said much of the trading was driven by individuals, but that a large amount of SMEs were also looking to lock in rates as fast as possible.

“Spreads moved around a bit, but the main challenge for providers like us was really accessing liquidity,” Mr Kimber told The Australian. OFX, like many other over-the-counter exchange services, relies on market makers to provide liquidity in times of high demand.

“At time of the vote markets were very thin,” Mr Kimber said. “In some of the multi-dealer portals where a lot of the banks access liquidity there were very few quotes being shown,” he said.

Some foreign exchange houses couldn’t handle the event on Friday. TransferWise, a UK-based peer-to-peer money transfer service, had to stop trading the pound because their platform couldn’t support the volatility, while Canadian online exchange giant XE saw its website crash under the traffic.

“To access liquidity you actually had to do it on a bilateral basis. For us, that meant working with the banks,” Mr Kimber said, pointing to OFX’s partnerships with 18 banks around the world.

“That was the difference between being able to trade and not -- you had to have strong relationships with the banks who are making markets and have back-up plans if those banks hit their limits,” he said.

Mr Kimber said the results were a short-term boost and provided a window into the strength of the company.

“One swallow doesn’t make a summer. It’s not going to make our whole year, it’s just a good stress test on our scalability and a sign that our counterparty relationships run deep,” Mr Kimber said.

“I am delighted to say that following weeks of careful planning in the lead up to the vote OFX was able to process a record number of transactions, a record volume of turnover and generate record levels of revenue,” OFX chief executive Richard Kimber said.

The firm said both daily and weekly benchmarks were set for its operations, even surpassing the level of activity seen during the GFC in 2008.

News of the records were well-received by investors, with OFX shares jumping 1.8 per cent to $2.22 at 11.25am (AEST). Ahead of the announcement its shares were trading down 1.5 per cent.