26 Degrees at iFX EXPO Asia 2023: James Alexander explains why Invast Global rebranded

This year’s iFX EXPO Asia took place at the Centara Grand & Bangkok Convention Centre at CentralWorld, Bangkok, Thailand.

From 20 to 22 June, the arena hosted 3,000 attendees, exhibitors, and sponsors which included successful start-ups, leading international brands, and industry giants.

Among the leading FX brands present at iFX EXPO Asia 2023 was 26 Degrees, the renowned Prime of Prime broker previously known as Invast Global. With a renewed focus on serving broker-dealers and hedge fund clients, the Sydney-headquartered PoP broker is repositioning itself amid a shift in the Prime Brokerage landscape.

26 Degrees is partnered with some of the most respected Tier 1 Prime Brokers (Barclays, J.P. Morgan, NatWest, Morgan Stanley, and Deutsche Bank) in order to meet the multi-asset needs of global brokerages that are being underserved by PBs as regulatory reforms – namely Basel III and Basel IV – begin to take effect.

Focus on brokers and hedge funds

To discuss the rebranding and how it pertains to the new industry landscape, FinanceFeeds Editor-in-Chief Nikolai Isayev spoke with 26 Degrees Chief Commercial Officer James Alexander.

“As we reflected on our 10-year journey, we started to think about the future more and more, on where to take the company, where the strategic focus would lie. And it was clear to us that the areas we’ve had the greatest success and enjoyed the most rewarding client relationships are the broker segment and the emerging hedge fund market”, Alexander said, adding that the team took the opportunity to really refocus the business, the brand, to be something that is unique but also highly accessible to both brokers and hedge funds.

It was no secret that Invast Global’s core strengths were in serving brokers and hedge funds. Founded in 2013, some client relationships continue to this day, “which in our space is absolutely amazing and I’m personally very proud of.”

It is these strong relationships with tier-one bank Prime Brokers that propel 26 Degrees to step up to the challenge and fill the gap left by PBs on account of the rapidly changing regulatory environment, with Basel III and now Basel IV forcing them to reduce exposure.

“It’s been our view for a long time that the prime brokerage market was going to face significant changes, headwinds in many respects but also opportunities. Some regulations that have been rolled out, specifically Basel III, and in the future Basel IV, are going to present real world challenges for PBs. In the last 24 months, we’ve seen the exit of Jefferies PB and Credit Suisse, which is absolutely enormous. The reverberations of that particular exit (CS) are still being felt both in the PB space and liquidity space”, said James Alexander.

“We, by virtue of our strong balance sheet, a listed parent company and lineage, have been very blessed to access the PBs we do. But we do know a number of clients who wanted to access PBs are really struggling to do that. PBs are being more conservative in their risk appetites and more discerning of who they onboard and the type of entities they onboard. This is something we anticipated and saw playing out. It’s not only an opportunity that exists today in the present market, but one that will continue for many decades to come.”

26 Degrees expanding into new jurisdictions and building products for brokers

Such a definitive rebranding, including the change of name, often begs the question of what will change for customers, but the 26 Degrees CCO clarified. “For our existing clients – broker dealers and hedge funds – the practical change is nothing at all. It’s business as usual”.

What this really represents is the refined focus on serving them, he added. Besides enhancing the resources allocated to serving these two customer segments, 26 Degrees is stepping into a number of additional jurisdictions and “setting up offices right now as we speak.”

“We want to put high quality resources to serve our clients in key jurisdictions, like Tokyo, London, Cyprus, where we’ve got a significant concentration of broker-dealer and hedge fund clients. Over the longer term, we think the new focus will drive more resources into building products and services for our broker dealers.

“A practical example is that we’ve always been a bilateral counterparty to clients, but for our broker-dealers we’ll be very shortly releasing – for selected clients – the ability to give up trades from our PB to their PB network”, he said, adding that a renewed focus on technology is also on the cards. On that note, the company last year replaced several incumbent systems with oneZero’s core trading technology.

PB market is off limits to certain brokers and hedge funds

James Alexander argued that the industry needs Prime of Prime more than ever because of the shifting landscape, in regard to risk appetite, balance sheets, and focus. “What’s interesting is that even the PoP space is undergoing disruption.

Not only Tier 1, but also PoPs”, who may be losing a little bit of focus. “We’re sending a clear message to the market that we are here, strong, 10 years now, and our focus has never been more laser-like on you: brokers and hedge funds.

The timing couldn’t be better. With the increased regulatory pressure, Prime Brokers are likely to exclude a number of brokers and hedge funds. Those with $100-200 million in AUM or balance sheet “are really going to struggle to onboard with PBs, which means the PB market is off limits to certain customer segments. Hence the need for a Prime of Prime who can step up as an intermediary, provide access to credit, etc.”

The name 26 Degrees reflects the PoP broker’s “Australianess”

To finish up the interview, Nikolai asked how they came up with the name 26 Degrees. “We did not send out a survey”, James Alexander joked. The rebranding was discussed within the team, with CEO Gavin White taking the lead – “He’s very passionate about the business and the brand” – and support from Takeshi Kawaji, President and CEO, of Inv Inc.

The 26 Degrees CCO further explained that the name aims to reflect the firm’s “Australianess” as the firm continuously expands across the globe. The name refers to the 26th degree latitude which runs parallel across the widest breadth of Australia dividing it from North to South. It crosses the Indian Ocean to meet the Cradle of Humanity in South Africa, where humankind evolved.

“Trying to reflect the breadth of our country and our engagement globally. It’s a really nice and simple way of distilling that down”, he continued, noting that many clients don’t have English as their first language – South Korea and Japan, for example. A numerical name is immediately recognizable.

James Alexander ended up by sharing one of the secret sauces of their success and it all comes down to the multicultural and relaxed nature of Australians. “When trying to build a business globally, being relaxed and defusive in those conversations tends to foster those relationships. We try very hard to relate to our clients on a very human level”.

26 Degrees aggregates bank and non-bank liquidity to offer bespoke, optimized liquidity streams with a carefully designed suite of trusted collateral solutions and leverage arrangements. 26 Degrees Global Markets is a registered trading name of Invast Financial Services Pty Ltd (ABN 48 162 400 035) (AFSL No. 438283).