Prominent electronic trading company Invast Global has ventured into the Prime Brokerage sector, which goes into service under the name…
Prominent electronic trading company Invast Global has ventured into the Prime Brokerage sector, which goes into service under the name “PurePrime“, and is being offered from the company’s headquarters in Sydney, Australia.
Today, as FinanceFeeds exclusively reveals the launch of the new PurePrime service, Gavin White, CEO of Invast Global, speaks to Andrew Saks-McLeod in order to detail the entire rationale behind the company’s foray into the institutional business.
Invast’s PurePrime service is aiming specifically to attract hedge funds as corporate clients. This is a very interesting high net worth niche. How will Invast provide the best liquidity to HFTs and high volume hedge funds and proprietary traders?
Quite simply we will allow clients to structure their own Liquidity mix, with live analysis and advice from our expert liquidity team, to ensure they have the right mix for their specific needs. Clients will be able to see the real Liquidity Providers within their aggregated feed, both pre-trade and post-trade. This is revolutionary transparency for PurePrime clients – and ensures there are no hidden markups or other “tricks”. It represents a maturing of the Prime Services space – a professional, transparent offering from a dedicated Prime Services specialist.
HFTs (and MT4 brokers actually), generally require the tightest possible top-of-book with lowest response times and lowest rejection ratios, whereas prop traders and hedge funds generally require very “thick” liquidity and a deep book so that they can trade in large clips. But what we know is, you can’t really generalise.
You have to work closely with each client, on an ongoing basis, to ensure their feed is optimize for their needs. Some clients actually need multiple feeds of different styles to satisfy different needs within their own firm, or amongst their own client base. We are fortunate in that we have all of the LPs connected.
We give the clients regular analysis, which empowers them to know which LPs are performing best for their exact flow. We make constant recommendations to our clients. We help them watch for opportunities to optimise their mix. These are skill sets and expertise our team has learned by looking after some of the world’s top hedge funds and brokerage clients at Tier One PBs. We know this part of the industry intimately and our clients are benefiting from this knowledge.
Our clients tell us that our offering is the first time they have been given the opportunity to access Prime Services with such transparency and control. That’s why we have called it PurePrime – it’s the purest form of Prime Services available to clients who don’t have Tier One Prime Broker access themselves.
We are not a retail FX broker with a Prime-of-Prime side-business. We are more like a true Tier One Prime Broker – but with the added advantages of being more customised and attentive than a Tier One PB. We work very closely with our clients, providing a much more nimble and responsive offering than the Tier One Prime Brokers provide. It’s the best of both worlds for our clients.
Which markets will this focus on primarily in terms of region?
We are globally focused, with more than 50 institutional clients from across 15 different countries. But being the first home-grown Asian Prime Services offering, we naturally have an affinity in Asia and most of our clients are from this region. We have also had great success in Eastern Europe though – especially Turkey – and we are making a name for ourselves now in the more established markets of the UK and Europe.
The focus has been on liquidity provision and prime brokerage recently. How do you see non-bank prime brokerage evolving toward corporate and proprietary operations as well as catering for retail FX brokerages?
I think the true Prime Services specialists will come to the fore. Many firms are simply tacking on a “Prime” or a “Pro” brand to their retail offering and holding themselves out as a Prime-of-Prime broker. This is simply opportunism on behalf of these firms and I think they will be found out sooner rather than later. Many of these firms are internalising the flow from their “Prime” clients and not providing transparency in execution. This can lead to a whole world of problems, especially conflicts of interest. We believe the transparency and accountability of PurePrime is the future for the industry.
We also believe it will be the highly capitalized firms that will succeed. The long term winners will be respectable counterparties, listed entities in strong jurisdictions with longstanding corporate histories. The Invast Group ticks all of the boxes with our PurePrime offering.
In terms of structure, how is PurePrime connected to hedge funds, and does it have a sophisticated risk management system in order to cope with the order flow from commercial hedge funds?
We utilise numerous institutional quality systems to provide a wide range of connectivity choices for our clients. We have servers in 3 Equinix locations – LD4, NY4 and TY3 (live in Q2). We offer the highest quality API connectivity to industry leading FX aggregators and bridges, such as FlexTrade, Integral, PrimeXM etc, with cross connection and co-location options.
In the equities and futures space, we have DMA connectivity to all of the major stock exchanges and futures exchanges across the globe (28 exchanges in total).
In the Asia Pacific region, many retail brokers used the IB model until today, especially in mainland China. How can Invast take the PurePrime service into South East Asia and are there any plans for China, especially as liquidity and execution facilities can now be provided directly to Chinese banks meaning that traders can use local firms for commercial order flow and institutional prime brokerages can provide global liquidity?
We have a strong multi-lingual team in Sydney with special expertise in Chinese dialects. We have plans to open an office in China to service institutional clients there later this year. It is definitely an exciting opportunity in this part of the world. We feel very fortunate that we have our product coming to market at the perfect time. We really feel we are best placed to meet the needs of Asian-based clients, as most of our competitors are US or UK based boutiques, with little or no presence in this region.
What is your opinion on how the prime brokerage sector can elevate itself away from being viewed as one level above retail FX firms, yet still serving direct customers, and do you see many retail aggregators going the institutional route in future?
I think transparency and professionalism are the key. Transparency is obvious. Sophisticated clients will not put up with funny business from their Prime Services provider. Absolute transparency, as we offer with PurePrime, is the only solution. Clients deserve it.
Professionalism is important in terms of the way in which the firm manages its finances. Capitalization of the firm itself will be critical – only the highly capitalised will survive the changes affecting the industry now and in the future.
Firms big enough to have the resources to stay on top of regulatory reforms is also important. Regulatory reforms are one of the biggest burdens on the industry going forward. Prime Services firms will need to devote a lot of time and resources toward keeping abreast of these reforms, otherwise the continuity of their offering will be threatened. Responsiveness to client needs is also going to be a determinant of whether a firm succeeds or not. Clients need to be in control.
They need to be able to design their own offering to meet the specific needs of their own client base. In order to do so, their Prime Services provider will need to be flexible and responsive. I think some retail aggregators will try to enter the Institutional space, but clients are very savvy. They know when a firm has particular expertise in Prime Services – it stands out very clearly when a firm, or staff, are faking it.
Australia has a very institutional environment, and ASIC has scrutinized retail margin FX trading over the last 3 years, issued less licenses for retail firms, yet has been very accepting of practices such as HFT. Do you see Invast capitalizing on this and being part of Australia’s institutional tour de force?
Yes, we have chosen to setup in Australia for very specific reasons. The regulatory regime is clear and respected. There is an abundance of multilingual expert staff. There is a solid, trustworthy banking system supported by a stable, established legal and political framework.
Oh – and clients love coming down to Sydney to visit us. We show them the sights of our beautiful city. The excellent seafood and fine wines is particularly popular with our clients. We certainly plan to continue grow our business and presence here.#australia, #invast, #prime, #PurePrime