Maybank’s Prime Brokerage presence in London, therefore, and its remit to hire key figures from the FX sector such as Alex Maslin, represents a definitive expansion by key institutions that are looking to expand their prime brokerage services across Western markets
A new year, a new career move for Alex Maslin.
Mr Maslin is a very familiar figure within the FX industry, having been a prominent professional within London’s large CFD and FX brokerages for almost a decade at senior level.
This week, Mr Maslin leaves CMC Markets, where he was Institutional Sales Manager for just under four years, working closely with Head of Institutional business Richard Elston.
He heads to Malaysian bank Maybank, where he will move from the non-bank institutional sales sector into the Prime Brokerage business in which he will now face prime of prime firms and institutional liquidity providers, his appointment being within Maybank Kim Eng which is the investment banking and brokerage division of Maybank and has been in operation for more than 40 years. The group provides services for equity capital markets, corporate finance, debt markets, derivatives, institutional securities broking and research.
Mr Maslin’s move from CMC Markets signals an end to a tenure that began in February 2015 when he joined the firm from IG Group in London, where he spent 5 years as Institutional Sales Manager, a position that he was promoted to from his inaugural post at IG Group as Sales Trader when he joined the firm in 2009 from MF Global.
Mr Maslin’s shift from British CFD firm to the London office of an APAC-based Tier 1 prime brokerage division of a bank represents the very definitive future that lies within institutions in the Far East on their road to world market domination.
Maybank may well be a Malaysian universal bank, however its key operating “home markets” are Malaysia, Singapore and Indonesia. According to the Brand Finance report, Maybank is Malaysia’s most valuable bank brand, the fifth top brand in Asean and ranked 83rd in the world’s most valuable bank brands, and Mr Maslin joins its Prime Brokerage division just as Singapore is having its heyday in heralding itself as the next “London” in terms of Tier 1 institutional bank liquidity and global FX market provision.
It is entirely possible that Australia, the world’s most populous and high quality region for retail FX and CFD brokerages, many of which are romping home with massive revenues and enjoy a cast iron reputation for high quality and good leadership, may become totally reliant on nearby Singapore for its interbank relations rather than on London, a distant region which is less aligned with APAC.
Maybank’s presence in London, therefore, and its remit to hire key figures from the FX sector such as Mr Maslin, represents a definitive expansion by key institutions that are looking to expand their prime brokerage services across Western markets, which can only be a good thing in these times of liquidity contraction and counterparty risk adversity displayed by many UK based Tier 1 interbank FX dealers.
Despite this evident advantage in efficiency from Western banks among western liquidity takers, they are wounded and jaded.
They are jaded from having experienced credit crunch after financial crisis, wounded from having too much presence in economically moribund and technologically outmoded European nations where no progress is made and operational costs are not worth the expenditure for the stagnant return.
They are reeling from regulatory fine after government censuring, and have been subject to publicly funded bailouts from the coffers of bankrupt socialist juggernauts such as the European Central Bank, which has as much knowledge of how the electronic markets operate as an alpaca does of operating a sewing machine.
Outside London, there is no electronic trading market to speak of in a continent of 500 million people.
London powers the entire continent from just one square mile which is evident in the output figures, those being that London’s entire financial sector employs just 0.0009% of the entire EU workforce, yet is responsible for 16% of all tax receipts.
Things are very different in China and South East Asia.
In January last year, I stood in front of 400 senior Chinese FX industry executives and explained that within a very short time, China will dominate its own domestic market FX industry. Several years worth of extensive research by FinanceFeeds senior management inside China alongside strategic Chinese partners across the entire country has demonstrated that the same constraints do not exist in China as they do outside China.
All were in agreement.
Last year was most certainly a year in which the entire prime brokerage sector was subject to a massive amount of evolution in the Western world, largely due to the increasing demand from brokerages for the best possible execution and access to the most accurate pricing and trade processing environment, as well as the counteraction to this, which has manifested itself in the major Tier 1 banks having curtailed the extension of credit to OTC derivatives firms due to their extremely conservative approach to counterparty credit risk.
This has created a situation in which the main Tier 1 banks are now ultra-conservative and are still licking their wounds by selling off retail divisions in their entirety, and restricting how much risk they take on counterparty credit extension to retail brokerages.
Complexity due to lack of credit and massive capital requirements? No problem in China
Meanwhile, brokers which have to face these counterparties have to stump up massive capital bases to maintain relationships with them and still be subjected to last look order execution on single-dealer platforms and then have to strike up relationships with further non-bank electronic communications networks such as EBS, Currenex, Hotspot FX and FXall in order to attempt to provide a more comprehensive liquidity solution against the banks’ pulling the rug out from under everyone’s feet.
The same brokerages are battling with this whilst focusing on mainland China, and its own restrictions toward allowing any transaction over $50,000 (which is nothing because most brokers have an omnibus account or a prime brokerage agreement and have to send much higher figures than that each month to overseas banks of the brokers they work with) out of the country for the purposes of derivatives trading.
China’s own banks, all of which are owned by the state, are massively well capitalized and have a very clever model indeed.
They do not expose themselves to risk, and they have assets which consist of property, cash, investments in company stock and indices that are so enormous that it is hard to quantify.
These banks, unlike the weary western banks, will extend counterparty credit to FX brokerages in China without the blink of an eyelid over risk.
Western banks are already wounded enough and are restricting what they can see quite transparently. It would be futile for a Western prime broker with no presence in mainland China to go to a Western bank’s eFX desk and ask for a large prime brokerage deal because of a massive Chinese partner that has been onboarded.
Now, this ethos and massive purchasing power has spread to other parts of Asia which are outside the restrictions of the government yet process a massive share of liquidity that comes from China and its aligned business partner nations.
Thus, an expansion to Europe, and especially London, of a refinement of liquidity availability from well capitalized and experienced APAC partners with talent from some of London’s best brokerages is a welcome one.