Finance Magnates first spoke with Gavin White, Chief Executive Officer of Invast Financial Services in November 2015, soon after he joined the company. At the time, he spoke of his plans to help steer the company forward and outlined the group’s approach towards permeating the prime of prime space in Europe.
Taking the opportunity to follow up on last November’s interview, we posed a series of questions to Mr. White, this time focusing on Invast’s performance as a prime of prime (PoP) broker. Mr White began by revealing what had made him interested in developing a PoP offering.
It’s been a case of being in the right place at the right time, with the right offering.
Why Invast Developed PurePrime
“We recognised there was a gap in the industry for a well-capitalised, non-bank firm offering professional, transparent and accountable prime services, for multiple asset classes (FX, Equities, Metals). We saw that there was growing demand globally for a firm who offered these services with the same integrity as the top-tier Investment Banks, but with more responsiveness and attentiveness to the needs of different clients. Since recognising this gap and setting about building a transparent Prime Services firm, there has been an industry-wide contraction in the Prime Broking industry due to regulatory reforms aimed at restraining the too-big-to-fail top tier banks. This has meant a lot of clients have needed an alternative. It’s been a case of being in the right place at the right time, with the right offering.”
Mr. White added: “It is the first time most of our clients have been given the opportunity to access Prime Services with such transparency and control which is why we have called our offering 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 side-offering of Prime-of-Prime. We are a dedicated Prime Services firm. More like a Tier One Prime Broker – but with the added advantage of being more customised than a Tier One PB.”
He further explained: “We work very closely with our clients, allowing them to structure their own liquidity mix, giving them analysis and recommendations to empower them to make the right decisions and optimise their mix for their specific flow. Our clients benefit from expertise our team has learnt by looking after some of the world’s top hedge funds at tier one PBs -we know this part of the industry intimately. We are constantly surprised by sophisticated clients who come to us after dealing with a broker who doesn’t offer true Prime Services.”
Solid LP Expertise
Mr. White went on to discuss the main advantages of Invast in securing liquidity from major banks and other LPs to its clients.
“We know the LPs intimately. Most of our staff have worked at the Investment Banks who are streaming us prices. Our Head of Liquidity, Geoff Last, is arguably the longest serving and most respected institutional FX dealer in Asia Pacific.”
Our Head of Liquidity, Geoff Last, is arguably the longest serving and most respected institutional FX dealer in Asia Pacific.
Mr. White further added: “Geoff and his team communicate very closely with our LPs so that the relationship is a strong one. We are a solid and respected counterparty, so we are easy for the LPs to onboard. In addition, we STP everything straight to the LPs, which means we do huge volumes with our LPs and they know they are getting all the flow – not just the “hard” flow. We have no mandate to take on market risk ourselves and pride ourselves on always aligning our interests with our clients. If our clients receive a bad fill from an LP, or too many rejections, we are straight onto that LP seeking a better outcome for the client.”
We also asked Mr. White whether the fact that the parent of Invast is a listed company plays a role in securing good LP deals.
He replied: “The fact that our parent company, Invast Securities Japan, is a highly-capitalised, listed entity is definitely helpful in securing a good deal with our LPs. The LPs know we represent a very solid counter-party. We clear their Credit Department checks easily and there is nothing that an Investment bank trader likes more than that!”
Regarding when the company launched its PoP offering and the number of brokerage clients it currently has, Mr. White said: “We launched our Prime Services offering in 2013, after spending more than a year designing and building the product to meet the needs of the clients. We now have over 50 Brokerage, HFT and Hedge Fund clients from across the globe, accessing FX, Metals and Equities Prime Services.”
He also elaborated by telling us where the majority of Invast’s clients are located, and whether the focus is just on APAC or if it extends beyond the region.
Creative Approaches to Marketing in the Post-ESMA EraGo to article >>
Mr. White explained: “We have clients from across the globe – over 15 different countries. Being the first Japanese-grown Prime Services offering though, we naturally have an affinity in Asia and most of our clients are from this region. But, we have also had great success in Eastern Europe recently and our offering is getting a lot of attention now in the UK and US.”
He was then asked: “What are the main offerings that clients of your PoP services are looking for and how dominant is MT4?
He responded: “MT4 is ubiquitous in the FX industry and we have designed our systems specifically to support this platform. Our team has been put together to encompass staff with special expertise and knowledge of MT4. However, we also serve sophisticated Hedge Funds and HFT firms, who require the highest quality API connectivity to industry leading aggregators and platforms, such as Flextrade, Integral, PrimeXm etc.”
In the Equities space, we are connected to all of the major stock exchanges and futures exchanges across the globe.
Mr. White continued: “In the Equities space, we are connected to all of the major stock exchanges and futures exchanges across the globe. We offer clients Direct Market Access to these exchanges using one of the world’s most popular institutional trading platforms, IRESS.”
He then went on to explain what connectivity methods are available and the ones which are most used by clients: “The Invast PurePrime infrastructure offers FIX API connectivity to multiple FX aggregators and bridges. We have multiple servers in 3 locations (NY4, LD4 and TY3). We can deliver our liquidity in a way that optimises the execution experience for our clients.”
Mr. White then spoke about incoming caps on leverage of 1:25 for institutional businesses in Japan and whether it would affect the offering that Invast is delivering to its clients: “Our PurePrime offering is based in Australia and is regulated in that jurisdiction. Regulatory changes in Japan are not relevant.”
We asked Mr. White whether clients that trade DMA CFDs can access pre and post market trading. He answered: “Yes, one of the biggest advantages of our equities and futures offering is that it is 100% DMA. This means clients can participate in pre and post-market auctions and all trading sessions.”
Mr. White elaborated on how from a technological standpoint Invast connects to 21 exchanges for shares and 7 exchanges for futures, explaining that it is “connected via our IRESS infrastructure and executed via the institutional pipes of our equities and futures Prime Brokers.”
Clients can see where they are in the exchange queue and they know immediately when their order is filled.
To conclude the interview, Mr. White was asked how Invast assures end clients that the CFDs they are trading are really DMA and whether their orders can be seen on the exchange when looking at market depth.
“Yes, it is completely transparent. When a client places an order, it is sent immediately to the exchange’s Order Book. Their order can be seen in the live market depth. Clients can see where they are in the exchange queue and they know immediately when their order is filled.”
He added: “Clients are effectively price makers on the exchange themselves. This is very different to dealing with a market-making CFD provider and it can mean significant improvements in execution and trading results for clients. All of our client trades appear in the official “Course of Sales” report of the underlying exchange. It is the most transparent and accountable way of trading equity and futures CFDs, which is why our offering is so popular amongst sophisticated investors, such as Hedge Funds and HFT firms.”