Spotlight on Hargreaves Lansdown: We investigate the £6.9 billion firm that is attracting London’s finest FX industry talent

The retail FX industry that we know today has grown and evolved into such a sophisticated, global, all-encompassing, leading edge network of fintech innovators developing the next generation of trading systems, multi-billion dollar electronic brokerages, and knowledgeable traders with algorithmic methods that emulate the prop desks of Chicago and New York. Indeed, so global and […]

The retail FX industry that we know today has grown and evolved into such a sophisticated, global, all-encompassing, leading edge network of fintech innovators developing the next generation of trading systems, multi-billion dollar electronic brokerages, and knowledgeable traders with algorithmic methods that emulate the prop desks of Chicago and New York.

Indeed, so global and vast is our industry, that it is equally intertwined – therefore we all know each other, don’t we? …. Or do we?

Despite the level of sophistication and, in many cases, systems and practices that are paving the way for the entire financial services industry, the major firms in the FX business are still very much concentrated in certain areas, those being London for the interbank and institutional sector, Cyprus, Australia and Japan for the retail sector, and then there are the burgeoning IB networks of China.

But what about Bristol, an affluent city in the West of England? 

Bristol is home to one of the largest companies in the retail financial services sector, Hargreaves Lansdown PLC (LON:HL). So large and prominent is Hargreaves Lansdown that it is attracting senior figures from London’s most well renowned companies, as exemplified by last week’s announcement that IG Group CFO Christopher Hill who left the London-based CFD and spread betting company recently in order to become CFO at Hargreaves Lansdown.

IMG_0613

In order to investigate the raison d’etre of the company further, FinanceFeeds met with Hargreaves Lansdown’s Head of Communications at the company’s headquarters in Bristol yesterday.

Mr. Cox explained that the firm is an FTSE listed company which grew from small brokerage firm in the 1980s, into a large investment firm meeting needs of retail clients with small to large amounts, utilising market products.

£6.9 million market cap

The company’s market capitalization today is a substantial £6.9 billion, and it developed its own proprietary trading and execution system, under the name of Vantage.

Mr. Cox explained to FinanceFeeds reporter Richard McLeod that “In terms of the company’s method of providing products to retail customers, the majority of contracts are execution only which avoids the cost of financial advice, although advice is available from Hargreaves Lansdown should a customer require it. This direction is very cost effective, and is coupled with our in-house operating platform.”

What factors led a small, Bristol-based financial adviser on the path toward being a vast investment company?

Mr. Cox explained the company’s journey. “The decline of the investment bond market, which was usually from insurance companies, and is now down to a mere 10% volume since its heyday a few decades ago, helped the quick transition to modern day style of technological service provided by Hargreaves Lansdown.”

“The founders, Peter Hargreaves and Stephen Lansdown, sought to be the biggest and the best. Their combined talents and entrepreneurial skills led to a strong and trusted service with funds now at £54.7 billion from 760,000 clients.”

Proprietary trading technology

Hargeaves Lansdown’s self-developed Vantage service, in-house operation, offers customers a wide selection of option choices such as spread betting and CFDs, ISA’s, SIPPs as well as corporate and government bonds, ETF’s, Investment Trusts. The company considers its strong customer service and safety of client funds to be top priorities.

IMG_0620

Trading in the instruments that the company provides are manageable via the Vantage system which holds different types of investments together in one place with one valuation and dealing service, and whilst CFDs and spread betting are very much part of the firm’s product range and are offered under the HL Markets brand, Hargreaves Lansdown has 14% of the UK’s market share in ISAs.

The company’s CEO is one of Bristol’s most successful commercial leaders. 43-year old Ian Gorham, whose salary is £500,000, superseded Mr. Hargreaves in 2010 and has maintained the company’s incredible financial strength.

Mr. Gorham is a family man who enjoys golf, however most certainly does not engage in some of the rapidly-depreciating lifestyle pursuits of some of his Square Mile-based peers, as despite his more than comfortable salary, he drives a Hyundai which fits in just anywhere and, in our opinion, makes a statement of responsibility.

Hargreaves Lansdown’s customer base is largely concentrated in Britain, and the company provides specific service level parameters with regard to its service. Mr. Cox explained that the company has a non-automated telephone menu, and a help desk at the company’s Bristol headquarters with response times in less than 10 seconds.

Bristol’s maritime prominence during the pre-industrial revolution merchant era led to the city being a longstanding insurance center, due to the need for marine reinsurance when the Bristol merchants used the city as an important port for global trade.

Today, electronic trading has taken over from the physical, and Bristol’s traditional insurance and retail banking origins are giving way to what is clearly more than a challenge for London’s largest, high tech investment houses, and Hargreaves Lansdown has risen to the top via that journey since its inauguration in 1981 by Yorkshire-born computer salesman Peter Hargreaves and Bristolian accountant and football enthusiast Stephen Lansdown, especially if the company’s rising share prices are an indication.

Hargreaves
Chart: Google Finance

Photographs: Top Left; Hargreaves Lansdown’s plate glass headquarters in Bristol, England. Lower right; Hargreaves Lansdown develops its own proprietary trading system which handles multiple assets from one dealing platform.

Featured Image: FinanceFeeds reporter Richard McLeod meets Hargreaves Lansdown Head of Communications Danny Cox for a full informative tour of the company’s operations

Read this next

Digital Assets

FINMA-regulated digital asset provider Taurus expands into Germany

This expansion follows recent moves by BaFin to accelerate the licensing of crypto custody services, aiming to boost market confidence. Following this, several new licenses were issued, notably to Commerzbank, making it the first full-service financial institution in Germany to receive a crypto custody license.

Inside View

Stocknet’s Nick Hall defends gamification as trading platform market set to hit $15.34b by 2030

“The growing popularity of gamified trading has the potential to tackle this financial literacy gap. Rather than simply giving users unfettered access to markets and letting them figure things out for themselves, platforms can offer virtual skill games and challenges to help educate traders and prime them for success.”

Inside View

Infographic: Interest rate and FX derivatives are driving rise of OTC derivatives market

These trends suggest a growing and evolving OTC derivatives market, with an increased focus on risk management and regulatory compliance. The rise in clearing rates, along with the increased initial margin requirements, reflects a more cautious approach to risk in the financial services industry.

Market News

Bank of Canada’s Final 2023 Policy Update on the Canadian Dollar and Future Monetary Landscape

The Bank of Canada’s final policy update for 2023, as reported by Bloomberg, had a relatively subdued impact on the performance of the Canadian dollar, especially when compared to the discernible market reactions following prior BoC policy decisions throughout the year.

Inside View

DTCC’s Systemic Risk Barometer Survey found 2024 US Presidential Election as a top risk

U.S. political uncertainty, particularly regarding the 2024 Presidential Election, has emerged as a key risk, with 51% of respondents highlighting it as a major concern. This reflects the potential impact of election outcomes on market conditions and the industry.

Executive Moves

Options Technology promotes Laura McCann to CFO

“Laura’s promotion to CFO is the next stage in our long-term strategy of building a world-class finance team servicing the global business from our Belfast office. Back in 2016, Jon took on the challenge of laying the groundwork for that vision. Laura has been an integral part of the strategy from day one.”

Digital Assets

Thailand’s crypto economy under the spotlight: a report by HashKey Capital

“I’m excited by the rapid expansion of Thailand’s Web3 sector. With over 3 million overall crypto users and 600% growth in the market in recent years, the dynamism in our DeFi and NFT sectors is clearly evident. Thailand is increasingly becoming a hotspot for digital nomads, drawn by our crypto-friendly policies, affordable living costs, vibrant food and beverage culture and diverse cultural landscape.”

Retail FX

Webull Australia offers 5.4% yield on uninvested cash

“US dollar money market funds are heavily regulated, meaning client funds are managed in a safe, reliable and trusted environment, which is of critical importance to us, and continues to remain top-of-mind for our clients.”

Digital Assets

Bybit welcomes Ethena’s USDe, a decentralized stablecoin utilizing delta-hedging staked Ether

“Our collaboration with Ethena Labs represents our commitment to solving some of the biggest challenges in crypto today, not least, the creation of a decentralized stablecoin. The integration of USDe on Bybit expands our stablecoin offerings, providing our users with an array of uncorrelated solutions accessible from our Unified Trading Account.”

<