In less than a year, ADS Securities London operations has experienced an outflow of senior executives, the latest being BNP Paribas and Morgan Stanley Prime Brokerage relationship specialist Louisa Kwok. We look at the credentials of the alumni
The London division of Emirati electronic trading company ADS Securities has experienced another exit by a senior member of its management team, this time Louisa Kwok, the company’s Head of Prime Brokerage Sales & Product.
Within senior executive positions at large companies within this industry, movement within a very short space of time is relatively rare, despite the extremely dynamic nature of the business, and is particularly rare compared to the commercial mobility of those seeking to elevate their careers to such a level.
Ms Kwok has this week left the company after less than one year from her appointment, and is a highly respected senior institutional electronic trading executive, having joined ADS Securities in August last year from BNP Paribas, where she spent almost four years, her ultimate post having been as Head of Relationship Management for EMEA in the Prime Solutions and Financing Division – that being the division of the bank which provides Tier 1 prime brokerage relationships to the OTC industry across all asset classes from commodities clearing, to FX and equity prime brokerage.
Before joining BNP Paribas, Ms Kwok was Global Head of FX Prime Brokerage Negotiations at Morgan Stanley for three years, demonstrating that her position at ADS Securities gave her a distinct advantage in that she is absolutely au fait with how the prime brokerage divisions of the very banks upon which the entire OTC FX business depends structure their client relationships and dispense counterparty credit – a vital skill and knowledge set especially in these times of restricted access to Tier 1 liquidity that blights the entire FX business globally.
For ADS Securities, waving goodbye to senior talent has become the norm over the past twelve months, however FinanceFeeds can confidently put paid to any speculation that the company is reducing in size and market share, because whilst London is most certainly less of a priority, research in mainland China demonstrates that ADS Securities’ Abu Dhabi office serves a vast number of large high value IBs across China, many of them managing vast client portfolios.
In October last year, James Watson, CEO of ADS Securities’ London operations resigned from the company, simultaneous with structural changes made by the company.
At the time, Mr Watson, a former senior executive of FXall (now Thomson Reuters institutional ECN division) confirmed that the consolidation would not affect the firm’s ability to service clients or expand its business, and at the time he remained a member of the firm’s board of directors.
Upon his departure, Mr Watson said: “When I joined ADS Securities London Limited two years ago, my goal was to deliver against an ambitious growth strategy to provide the highest quality products and services to clients across Europe. The company is exceptionally well positioned and I feel we have achieved significant milestones. ADS Securities London Limited has a very talented sales team that will be supported by dedicated, customer-focused support teams in Abu Dhabi.”
In November last year, Mr. Watson, an astute and very senior institutional FX industry professional, made his diversion from the boardrooms of large electronic trading firms into an ultra-modern highly advanced startup where he now assists the board of a young, new and exciting ‘Drone Film & Video’ company called SkyFly Video Ltd to develop their products and strategy to build on their success to date.
The restructure also resulted in the moving on of Stephen Davie, one of the most experienced communications experts in the industry, Stephen Davie, who concludes his 5 year tenure at ADS Securities as Communications Director, taking on a Partnership position at specialist consultancy Dragon Advisory in November last year.
Congruently, Marco Baggioli was promoted to Executive Managing Director of Global Brokerage, and returned to the company’s Abu Dhabi head office.
Mr Baggioli is a highly regarded figure at senior level in the FX industry, and has regularly discussed several intricate perspectives with FinanceFeeds.
With specialist understanding of institutional trade execution and prime brokerage relationships, Mr Baggioli estimated last year during a meeting with FinanceFeeds in London that there had become a potential credit gap affecting up to $1.3 trillion in terms of average daily volume that needs to be filled, and that the entire method by which OTC firms conduct their business from the relationships with banks, through liquidity and technology providers and prime brokerages, right down to the retail brokerage needs to be examined in order to overcome this matter, reduce the cost and improve the efficiency of prime brokerage relationships.
“The lack of credit will lead to much wider spreads and increased pricing for all, from banks, to hedge funds, international businesses and all FX traders and, at the moment, no one is facing up to the problem” stated Mr. Baggioli.
Entering further into the discussion in order to examine solutions for this, Mr. Baggioli divided the retail brokerage world into three groups
In explaining how he viewed the topography of the tie, Mr. Baggioli said “To me, when I look at the retail space, I divide the world into 3 major groups of providers.”
“One group is made up of global players like ADSS, FXCM and Saxo Bank. Those, whether they were hit or not by the Swiss National Bank event in January 2015 tend to have less problems with regard to cost base or PB credit lines” he explained.
“Global brokerages have less problems with their cost base because even if these brokers have retail clients on small tickets, their prime broker allows for very cost effective aggregation of trades. These global players have the ability to keep prime brokerage costs low by not suffering small ticket charges. They do this by putting together the flow of a very large number of clients and give them to their prime brokerage once aggregated usually via Netlink” – Marco Baggioli, Executive Director, Global Brokerage, ADS Securities
“The second group is made up of purely local retail brokers which are specialists in their own niche market or region, whether it is because of regulations that mean that they cannot go abroad, or it is because everything is in the local language of their market, for example” explained Mr. Baggioli.
“This type of company often suffers from very high prime brokerage costs. This is because, for example, if you are a broker in Turkey and offer 24 hour access to clients and trade G5 with liquidity from several different makers, it becomes quite difficult to aggregate throughout the day a relatively small and fragmented flow into a million dollar ticket, or more, to give to your prime broker and avoid surcharges, even during market liquidity hours like London morning.
Let’s say they pay $3 per million, which is competitive, however $3 per million doesn’t apply pro-rata to a $10,000 ticket because small ticket surcharges would kick in below the $1 million mark. The actual cost for that ticket is probably going to be $1.50 because the PB needs to cover CLS costs, hence making the actual per million fee charge on that type of flow $150.” – Marco Baggioli, Executive Director, Global Brokerage, ADS Securities.
” For these types of companies I would recommend not to go the prime brokerage way, not even the PoP one. It is better for that type of retail brokers to go to a global provider like ADS Securities and take our liquidity in aggregated form instead. We have access to about 80 feeds from bank and non-bank providers as well as from ECNs in one package with no PB costs at all; our retail broker client can chose what LPs the want to add to the pool and we can save them 100% of the prime brokerage costs, whilst providing the same level of best execution they are getting today”.
He was indeed correct.