Way beyond the standard remit: One to one with Leverate’s new CEO Jacob Polyakov
Within the office of Leverate’s new CEO Jacob Polyakov, FinanceFeeds talks about how to empower brokerages in China, What CySec is doing, what not to do when approaching new markets, and how automation, consultancy and the background of professional services is now THE way to operate within the B2B FX sector. Here is a comperehensive and candid view from within
One thing is absolutely clear.
That being the need for companies that specialize in providing technology and liquidity solutions to retail FX brokerages to continually adapt their entire operational functionality to be able to not only keep pace with the ever changing demands of the electronic trading business globally, but to be able to lead those changes and empower said brokerages.
So diversified is the client base, list of asset classes and geographical reach that commercial providers of solutions that empower brokerages now need to consider the entire business in the method used by global professional services consultancies such as KPMG, Ernst & Young, or Accenture.
Indeed, this is coming to fruition as exemplified by the appointment recently of Jacob “Yasha” Polyakov as Chief Executive Officer of brokerage technology solutions development company Leverate.
Mr Polyakov is indeed a class act. Highly educated, urbane and with a background within exactly the global consultancy environment that is now needing to lend its structural and procedural aptitude to the FX industry, seeks to move Leverate to its next stage as one of the world’s largest OTC derivatives brokerage service providers.
Today, at the company’s global headquarters in Ramat Gan, Israel, FinanceFeeds met Mr Polyakov to detail the firm’s direction under his leadership, and to engage in a candid discussion with regard to what needs to be done to advance the cause of brokerages globally.
Mr Polyakov’s career path reflects this accurately.
He is a Certified Public Accountant, having begun his career at Ernst & Young after graduating from the Open University in the city of Beer Sheva, in the south of Israel, and had moved to Israel in his younger years in 1991 from the former Soviet Union, at a time during which 850,000 people made Aliya to Israel after the Soviet Union’s restrictions gave way to freedom.
Operations, financial acumen and professional services consultancy go hand in hand with FX technology these days
Continually furthering his professional education, Mr Polyakov took courses across the country, before being selected to lead Leverate.
Today, Mr Polyakov explained to FinanceFeeds that following his three year tenure at Ernst & Young, he was appointed CFO at a division of Afcon, which is a publicly listed Israeli company that designs multi-system projects ranging from control and automation to construction technology.
After this, he joined retail FX brokeraged Markets.com before the proposed purchase of Plus500 and AvaTrade by Markets.com’s parent company Playtech. At Markets.com, Mr Polyakov was Group Controller.
“This was a step back but I took the position because I saw the potential, as the firm had two key acquisitions pending. After regulators in Britain vetoed the acquisitions, I started questioning the future of my role in the group” he said.
“At that point, I was approahced by an investor from Poland, which involved a series of large introducing brokers wishing to start their own technological enterprise, and this is how I was exposed to Leverate” – Jacob Polyakov, CEO, Leverate
Forging ahead: International approach to key business areas
Personable and affable, Mr Polyakov explained that he had been residing in Cyprus recently, an island nation that is home to a vast array of FX brokerages, technology providers, liquidity management companies and professional services organizations that center around the entire compnent structure of the FX industry.
“My competitive edge is that I understand the needs of the retail brokerage, having worked at Markets.com” he said.
On outgoing CEO Kobi Gur, Mr Polyakov explained “Kobi came from technology firms, particularly AMDOCS. He had also spent considerable time at gaming software provider Playtech. Kobi brought his business and operational experience from technology companies whereas my operational skill is from the financial side of running a business.”
Looking closely at the company’s priorities for adaptation and growth, Mr Polyakov said “Leverate’s board is very keen to invest in the company, so it is important that they have brought someone with a strong financial background to strengthen that investment.”
The company’s operational focus and change of direction has been made apparent by the replacement of certain key personnel by Mr Polyakov.
Gone is the very regional approach, and along with it, the sales managers and staff that conveyed the corporate image in that direction, replaced by very astute industry professionalls from top companies globally.
Ben Richter, who had held institutional sales positions at FXCM in New York before joining Leverate has been promoted to Head of Sales, and Natalia Vizir has been appointed VP Customer Care. “We have placed all of the front end customer facing division of the company under Natalia’s management, from the onboarding, customer care, to retention, so there wont be discrepancy between what a customer thinks he will get and what he actually gets” explained Mr Polyakov.
In line with this, Chen Ben-Nun, an industry executive who was at retail FX success story Plus500 from its outset and witnessed its rise to massive prominence from its humble origins in Haifa, where Technion-educated young computer scientists formed the basis for what is now a $1 billion company, is has been promoted to Value Add Service Manager, and is working on the development of a new CFD and spread betting solution for established British firms.
Want to work with affiliates in China? It will not work, and nor will lots of brokerage ads!
“If I could surmise certain aspects of how I see the future of Leverate, I want to change the frame of mind of customers who consider the company to just be the technology partner which just provides a platform and brokerage system, into an organization that wants to be part of the success of the firms that we work with” – Jacob Polyakov, CEO, Leverate
“Nicc Lewis, our CMO, will lead Marketing Services and Acquisition Services for clients” said Mr Polyakov.
Ms Ben-Nun’s team will help clients set up and utilize Leverate’s systems such as Optim8 which is the company’s business intelligence and perfomance marketing tool, and any other assistance or consultancy they need. Mr Lewis will come in should clinets need acquisition assistance, including the establishment of a dedicated and exclusive marketing agency for Leverate clients.
“The first product that I will be implementic with regard to China is a holistic end to end solution that combines online and offline functions, in order that we can get involved in building an entire corporate operation for a broker who wants to entire China. With this, we can support the locating and renting of offices, recruitment of personnel, securing of local supplier contracts and effectively all that is required to run a brokerage, in order that firms can enter China using our expertise to help them structure their entire business in the way required in China, and to get the maximum impact” – Jacob Polyakov, CEO, Leverate.
“In china, we have created a system that connects China and Europe together within a low latency package, and have invested a lot of capital to ensure minimum difference, and within this system, all aspects are synchronized” explained Mr Polyakov.
“We have implemented a mix between hardware acceleration and local hosting with the two local ISPs, one that covers the north and the other that covers the south of China. Where the blend happens is where you get minimum ping time. On-account execution is approximately 2 milliseconds, and trading through through liquidity is 100 miliseconds for a round trip on liquidity processing directly to a prime of prime brokerage, whereas the industry accepted range is between 200 to 300 miliseconds” he said.
“Interestingly, in China, we have a broker which is a customer of ours, that conducted a ping test between us and a competitor on Youku (Chinese equivalent of YouTube – Ed) and listed himself as a premium broker because of the results of th test that demonstrated a very low latency ping time between the service he received from Leverate and that provided by a competitor” he said.
Ensuring your technology solution is the easy part! If you’re western, how do you know how to get into China?
Mr Polyakov, along with key senior executives at Leverate understands that for many brokerages wishing to approach the all important Chinese market for the first time require a comprehensive network, and a partner which understands the entire ecosystem that exists within China, especially bearing in mind that the internet and access to vital information is blocked by the government to those on the outside of mainland China, and vice versa.
“When operating in China, brokerages need to know which Which media to talk to, how to make their product range count on a regional basis, and operational aspects such as how much to pay staff” said Mr Polyakov.
“Our team in China, headed by Andy Zhang, all comes from top brokerages houses, therefore they are very qualified and understand the needs of the customer. Media partnerships are different for each city in China, and the way approach differs for first, second and third tier cities. Brokerages have to build relationships with right media person for the right city.”
Andy Zhang’s leadership takes precedence as co-founder and current Leverate Board Member Itai Damti has taken a step back in order to focus on various fintech startup endeavors.
“You cannot simply put up Baidu ads and use an affiliate network and hope it works, and then sit thousands of miles away pondering where in China the next market entry should be, as this will be completely ineffective” – Jacob Polyakov, CEO, Leverate.
What will Leverate bring to the future of FX and the wider FinTech industry?
Looking ahead, Mr Polyakov explained that Leverate is focusing on three major markets. One of them is FX, which is the firm’s core business activity thus far, the other two being Cryptocurrency, and online marketing. “Optim8 is a very nice tool for first steps in Online marketing” explained Mr Polyakov. “I think we can reassess this in half a years time, however Optim8 is atool whose current best vertical is FX because that is our core business for several years, however it is not a tool that should stay in that vertical. We plan to take it to other sectors such as the healthcare industrym as well as ecommerce and provide it as a B2B solution for many cross sectors” he explained.
“The main idea is to extend the use of this tool outside the FX boundaries to other sectors, and demonstrate that its intuitive marketing value is critical and can be read across within many businesses” he said.
Continuing the evolutionary path that Leverate is treading is Cyprus’ FX industry, which is now a multi-faceted business, representing a major economy for Cyprus, and with the pan European MiFID II directive looming, will likely undergo further changes.
“I see great potential for Leverate Financial Services, our Cyprus based B2B provider in Cyprus” said Mr Polyakov.
“This is because with the implementation of MiFID II scheduled for January 2018, brokerages will be required immediately thereafter to abide by new infrastructure related rulings. Our Cyprus based Leverate Financial Services is connected to prime brokerage services for trade execution in accordance with European rulings, and I have already had clients approaching me to manage the transition from offshore to EU license. It is apromising time. Everyone will soon realize that approaching clients in most of the established markets in the world via a brokerage registered in Vanuatu is not going to hold water. Various nations in the EU have begun to stop firms like that approaching clients. Poland is already blocking IP addresses of unregulated firms” – Jacob Polyakov, CEO, Leverate
Those who were present, along with FinanceFeeds, at CySec Chairman Demetra Kalogerou’s very direct address to retail brokerages will likely concur that this is vital.
Discussing that exact address today with FinanceFeeds, Mr Polyakov said ” We do not dismiss one part of the portfolio, as we need to excel in all areas. In Cyprus, the entire business has to maintain a three-way partnership, that being a balanced relationship between government, broker and trader.”
“The government in Cyprus’ remit is taxation, and ensuring stability and revenue, and along with that they sell to the public consumer protection. Meanwhile, the retail trader is looking for protection from government and trust from broker, and thirdly, the broker is looking to provide a trust relationship with the trader via government, and to make money.”
“Whenever you topple that in any direction, it affects any party within that structure. Cyprus has to find the balance. Looking at business people in general, they are pragmatic. If something does not work in Cyprus, for example, then if Malta or another region in the EU opens an easier area, maybe Cyprus won’t last as an exclusive venue for so many firms. There is a will within Cyprus to get it right, however finding that way is difficult, especially when it is so developed.”
Need direction? Automation will never take over but consultancy may well be the key
Bearing all of these caveats in mind, smaller brokers are not only charged with the need to continually keep their costs down, hence the drive toward automation, but also in some cases, even if not obvious to them at the time, can benefit from a consultative approach from their providers.
“Leverate is committed to providing added value services, in the form of consultancy to brokers” said Mr Polyakov.
“In my opinion, we should be there to support business decisions and sometimes provide leadership focuses on aspects of running a business. If someone needs more industry knowledge to help empwer and organize their firm, this is where we can contribute” he said.
“This is where consultancy is valid, to streamline a brokerage and help it modernize and be cost-effective on a continual basis” he said.
“I do not think we are anywhere near the age of brokerages going staffless, as the entire brokerage business is about transacting people’s money, therefore most customers need to hear a human voice. The question is whether a firm these days really needs 150 people, or whether it can have a smaller number of staff who are able to access and use vital information right on time, and this is where automation comes in and is effective” said Mr Polyakov.
“Yes, automation, which is something we are very active in developing, is very important but still customers want to hear that there is a human participation in their relationship with a brokerage. For example, clients want to hear compassion or authority in the voice of who they speak to, depending on what an investor is looking for in his brokerage” concluded Mr Polyakov.