ADS Securities loses more top talent as Prime Brokerage expert Marco Baggioli moves on

In just one year, ADS Securities has experienced an outflow of senior executives, including its London CEO James Watson, and BNP Paribas and Morgan Stanley Prime Brokerage relationship specialist Louisa Kwok.

This week marks the exodus of a further member of ADS Securities’ senior management team, this time interbank prime brokerage stalwart Marco Baggioli.

Mr Baggioli leaves ADS Securities after just over two years at the firm, commencing his tenure at the company’s global headquarters in Abu Dhabi, UAE as Executive Manager of Global Brokerage before moving to London to oversea the operational aspects of the company’s British division alongside astute and urbane CEO James Watson, before returning to the United Arab Emirates last year following his promotion to Chief Operating Officer.

Mr Baggioli is widely renowned as an expert in institutional and interbank electronic trading, his comprehensive understanding having been demonstrated several times during meetings with FinanceFeeds.

Last year, Mr Baggioli explained to FinanceFeeds in London that he estimated that there was 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 specific groups.

In explaining how he views the current topography, 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, COO, ADS Securities LLC

“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, COO, ADS Securities.

Indeed that is certainly accurate.

Mr. Baggioli’s knowledge and experience was expanded via his senior positions at global Tier 1 banks. He joined ADS Securites in the summer of 2015 from BNP Paribas where he was Global Head of Prime Brokerage, based in London, his ultimate position at the bank as part of a five year tenure at senior executive level within the FX prime brokerage division.

Prior to joining BNP Paribas, Mr Baggioli was Managing Director of Deutsche Bank’s Prime Brokerage division for two and a half years between 2007 and 2010, having previously served at Managing Director level at JPMorgan between 2002 and 2007.

The exodus of key personnel of this caliber has been significant at ADS Securities of late, including the recent departure of fellow BNP Paribas prime brokerage alumna Louisa Kwok who was at the company for less than a year.

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.