London’s prime brokerage drive in Asia: Wei Xu speaks to FinanceFeeds on London’s institutional importance to Chinese brokerages

The ongoing and ever developing increase in the prominence of prime of prime brokerages in the non-bank institutional sector, especially in London, is going international.

London’s Tier 1 banking powerhouses may well represent 49% of all global electronic order flow, however most certainly, the prime of prime brokerages which maintain liquidity relationships with the world’s most recognized banks and share the same Square Mile are also looking beyond the interbank heartlands of London and into the all important Asia Pacific region.

Established prime of prime brokerages in London have in many cases gone to the Far East by establishing Chinese and Hong Kong based divisions, however for the recently established elite, this is also a priority.

Today, in London, FinanceFeeds speaks to Wei Xu, Operations Manager at Stater Global Markets, which was established last year by astute and urbane former Citigroup executive Ramy Soliman, whose career path exudes knowledge on the interbank and retail side of the business, his five year Citigroup tenure preceded by five years at IG Group’s institutional division.

Wei Xu joined Stater Global Markets in August last year from Integral Development Corporation where he was Technical Account Manager, having spent one year in the position following three years at Gold-i where he was promoted half way through his tenure from Technical Support Engineer to Head of Support.

Tell us about your role at Stater Global Markets

I am the Operations Manager at Stater and report directly to CEO, Ramy Soliman. My main remit is to make sure the business operates correctly and efficiently on a daily basis. I am also involved in the business strategy and development.

You have previously been a Technical Account Manager at Integral and Head of Support and Asia Business Development Executive at Gold-i. How has the insight gained from your previous roles helped you in your role at Stater?

My technology background and previous experience definitely give me a certain edge. I have a deep understanding of how key technology solutions can be deployed and how they can help an institutional FX broker like Stater.

I’ve been able to work closely with Ramy to help select our technology partners and we’ve made very informed decisions in terms of choosing the most cutting-edge and reputable partners to complement our offering.

How important is it to Stater’s strategy that you are a native Chinese speaker? What are Stater’s growth plans in Asia and what role will you play in helping the company’s growth in the region?

Asia is a fast moving and very exciting market. The FX market there is at an early stage of its development cycle but is evolving rapidly. It is vital for us to get into that part of the world, to understand the market needs and client requirements. Our focus is on providing a strong, reliable product offering which will help clients with their current needs and future growth.

Being a native Chinese speaker helps me to get closer to the local clients as there is no language barrier. Having worked in London for all of my professional life, I am privileged to understand how businesses work in the two different cultures.

The two cultures are so different that having someone who understands the integrity and offering of Stater, can speak Chinese and also understands the Asian market is a real asset. It definitely gives us a competitive edge in the region.

During the iFX EXPO Asia 2017, what factors were most important to liquidity takers from the region when assessing a liquidity management and integration solution, and what platform architecture is favored for live market access from Asian clients?

Leverage, spreads and commission are still the main priorities for local retail brokers and liquidity takers. However they are also seeking a creditable counterparty. Stater Global Markets is authorized and regulated by FCA, which gives our clients or potential clients the extra comfort they need.

It’s important to them that they are dealing with a reputable and creditable UK entity. MT4 is still the heavily preferred platform in Asia, particularly in China, due to its ease of use.

However, there are a few brokers who are starting to look at more institutional platforms in order to differentiate themselves from other brokers. Being able to offer both retail and institutional platforms actually gives us an advantage when talking to potential clients. They welcome the choice.

Do you think that within a very short time, the entire ecosystem from liquidity provision to prime brokerage right down to the retail client front end will be hosted in China, and connected to global liquidity via Chinese branches of Western PBs with their entire infrastructure hosted and situated in China, and if so, will this create a massive surge forward in Chinese business as it will be within the government’s remit of being supervised from the inside?

It is very difficult to predict how the market and the ecosystem that supports it will develop to service China. Seeing how Asian hubs like Singapore and Hong Kong develop will provide a good indication of the direction. As regulatory developments happen, this will be the driver for the ecosystem that will be built. Stater can look to see how best to participate at that time.

In 2016, several new Prime of Prime brokerages entered the OTC derivatives business, largely based in London, the world’s most respected institutional electronic trading center. What considerations were instrumental to the founding of Stater Global Markets in its initial stages in order to differentiate its offering from competitors?

I think the contraction in the credit appetite at the large Prime Brokers justified the business need for Prime of Prime to be established. At Stater, our objective was to offer as much of the Prime Broker service to an audience that found it harder to access (PB derived liquidity and credit intermediation).

From a liquidity side, we offer liquidity feeds, just like other liquidity providers in our space, but our feed is institutional grade liquidity sourced directly from major Tier 1 banks and top non-banks. We have a very good top of the book price but also offer excellent market depth, meaning that our clients can deal in large amounts not far from the top of the book pricing. This, we believe, differentiates us and gives a real ability to tailor liquidity to clients’ needs.

It has been suggested that certain liquidity and collateral issues are arising from the use of more than one prime or prime provider or feeds from brokers at the same time. Does Stater provide a single liquidity feed to brokers and not process orders in congruence with other liquidity providers, or is Stater’s price feed often used in congruence with other prime of primes for contingency when one is a primary provider and the other is a secondary provider?

Stater Global Markets holds a matched principal license from the FCA, which means we operate in pure STP mode and all of our flow is passed directly to our liquidity providers. Stater does not have or offer any dealing functions.

We source all of our liquidity from Tier 1 banks and top non-banks and aggregate this liquidity to offer our clients the best pricing and execution. Our clients often decide on how they interact with their liquidity providers. We pride ourselves in having a competitive offering which meets client needs.