Multi-asset expansion as Swissquote goes down the real estate route

One of the electronic trading industry’s longstanding entities that is most committed to the multi-product cause is Switzerland’s largest online bank, Swissquote.

During the past few years, the firm has been committed to extensively expanding its large range of multi-asset trading functionality via organic growth into new market sectors and via mergers and acquisitions.

Today, Swissquote has entered another realm, this time real estate which is accessible to traders via the company’s Robo-advisor system which automates trades.

The Robo-Advisor invests in multi-asset strategies, and Swissquote states that alongside shares, fixed-income instruments and commodities, it is now also possible to invest in real estate. This allows Swissquote customers to further diversify their digital investment portfolio, meaning they can match their portfolio to their personal risk appetite more effectively.

The new real estate category includes ETFs and investment funds that focus on real estate, either directly or via listed companies active in the sector. This option also allows a preferred geographical location to be selected.

Swissquote launched its Robo-Advisory solution in 2010, making it the first electronic wealth manager in Switzerland. In doing so, Swissquote became a pioneer in the digital wealth management sector. The Robo-Advisor is based on the same algorithms as the Swissquote Quant Fund, which
received the Lipper Fund Award in 2016 for having the best performance over three years.

The company developed the user-friendly platform in order to make this innovative technology accessible to everyone.

During various discussions with Swissquote senior executives at the firm’s global headquarters in Gland, Switzerland, it has been very much apparent that the company focuses tremendously on ETFs and multi-asset trading of products and futures on listed derivatives exchanges, which is a direction that many firms in the FX industry have looked at going.

Since the company’s acquisition seven years ago of MIG Bank and ACM, the firm has expanded its proprietary trading environment into direct market access to equities, funds, bonds, warrants, and options & futures organically and via acquisition of its Swiss peers. The company also offers services designed specifically for asset managers and corporate clients, and has become extremely stable as a result of having a diversified product range.

On 15 March 2017, Swissquote acquired 750,000 treasury shares from Windel Investments Ltd which increased the percentage of Treasury shares to 7.67%.

Just six months later, it was anticipated that the company’s likelihood of increasing its benefit from Windel Investments’ activities in terms of commission and trading volume as well as having increase its number of treasury shares from 14,405,560 in the first half of 2016 until June 30, to 32,880,599 for the period between January 2017 and the end of June 2017. That is no mean feat.

These shares were initially transferred as part of the consideration for the acquisition of MIG Bank Ltd in 2013. The total consideration as well comprised of 210,000 stock options with a strike price of CHF 47.50 and an exercise period ending 26 September 2017. At 30 June 2017, the remaining treasury shares balance is primarily held for the purpose of covering employees share and option plans.

During Swissquote’s continual growth, the ability to operate as a Swiss bank as well as have an ever expanding capital base has enabled it to strike liquidity partnerships across all classes of the financial spectrum, an important move during the time at which many Tier 1 banks were moving away from the OTC world.

Due to the actions of some of the large OTC firms such as Swissquote (and some of the large British OTC companies), banks are now starting to realizethat this is an industry sector which provides enormous revenues and that the risk is not what it was when extending counterparty credit, largely due to the development of very sophisticated OTC trading environments and the links to raw materials, commodities, FX, metals and exchange traded futures that are now part and parcel of core business.

With a liquidity coverage ratio of 599% during the first half of 2017, Swissquote fared better than some of the Tier 1 banks which distribute FX liquidity.

Bearing this corporate ability to encapsulate various markets and provide direct access to a large number of asset classes in a method that outpaces traditional banks and stockbrokers, Swissquote is well poised to approach an automatically traded listed derivatives and ETFs on real estate companies and provide this opportunity to retail clients.