Mr. White will assume the mantle of responsibility from Brendan Gunn, who has been Invast’s acting CEO since early 2013. However, Mr. Gunn has resigned from the broker, paving the way for the ascension of Mr. White, who will now help steer the company moving forward.
He steps into the role as the broker ramps up its efforts to expand into the institutional realm. For Invast’s part, the group’s regulation has served as a primary impetus for this focus on the institutional space. According to Mr. White, “With post-GFC regulatory reforms really starting to bite around the world – and particularly in the FX industry – we are seeing a dramatic and ongoing contraction in the appetite of the large Investment Banks to provide Prime Services to institutions and sophisticated individuals.”
It’s easy to see why the big banks are curtailing their FX PB offering to only their most important clients
Furthermore, “The Swiss Shock has escalated the pace of this contraction significantly. When you add to this the FX fixing scandals the banks have been caught up in, it’s easy to see why the big banks are curtailing their FX PB offering to only their most important clients.”
Indeed, the FX industry has been convulsed by a series of episodic events over the past year or two. This has overwhelmingly rewritten the playing field, shifting the emphasis and scope of many offerings.
“Being a listed company with a strong balance sheet and large volumes generated by our huge Japanese client base, Invast is in the enviable position of being an important, long-standing client to two large Investment Bank PBs,” he added.
As such, “We realized quite early that we were in the perfect position to meet the needs of brokerages, hedge funds and professional traders who were falling off the Prime Broker platforms. We have the balance sheet, the stable access to PBs and a low cost base – all combined with the well-known Japanese adherence to ‘on-time’ service and technological expertise.”
“We have based our institutional business in Australia initially, to take advantage of the stable political, legal and economic environment there – and the highly regard banking industry. We have built a strong team taken from investment banks around the world. We believe our ability to build and support bespoke, optimized solutions for the most sophisticated of clients is second to none.”
Moving along, the focus shifted towards Invast’s contracts-for-difference (CFD) offering, which recently expanded into a more diverse suite. Mr. White reiterated the success of its offering, with a breakdown of key performers. “We currently offer a wide range of Index and Commodity CFDs, but it is our single-stock CFD offering which is really booming,” he noted.
“In line with our STP approach for FX, we decided to launch a Direct Market Access (DMA) CFD trading platform, where clients can effectively trade single stock and ETF CFDs live, straight onto over 30 international equities and futures exchanges. All of which is delivered through a single account and single margin facility.”
According to Mr. White, “As most of our clients are institutional or sophisticated individuals, we knew a DMA offering, with its inherent transparency and accountability, was the only way to go. We support this offering with a highly regarded Research Team, which provides short, sharp actionable single-stock research notes throughout the trading day. We call these ‘Hot Notes’ and they are available only to clients.”
The broker has had a lot of success in the Asia-Pacific (APAC) realm with these trading instruments, including its PortfolioInvestor platform. “Our Investment Committee also monitors market trends and constructs “thematic” CFD portfolios comprising up to 30 stocks and ETFs. These portfolios are distributed to clients via our unique ‘Thematic Portfolio’ trading platform, called PortfolioInvestor. This is our latest product and one that we are incredibly proud of and very excited about. We have launched this product recently to our clients in Australia, China and across Asia, with great success. We are now about to launch it to our 300,000 clients in Japan.”
In particular, PortfolioInvestor allows clients to choose from over 50 professionally constructed thematic portfolios – popular themes include: Driverless Cars, Ageing Population, Fintech US, Combating Cancer, Cyber Security and China Online.
We think PortfolioInvestor is the future of investing
“We think PortfolioInvestor is the future of investing. It is technology that was built for hedge funds, but is now available to individual investors,” he predicted.
Many around the industry believe that the contraction in the FX Prime Broking space is at a watershed moment. According to Mr. White, “We don’t believe this is a temporary phenomenon. It is the result of unprecedented regulatory reforms affecting the Investment Banks. These reforms have taken a long time to come to fruition, but are really taking hold now.”
At the same time, another phenomenon is unfolding. “In emerging economies right throughout Asia, Eastern Europe and the Middle East, the growing middle classes are discovering the benefits of diversified investing and are exploring FX as an asset class. This is feeding the growth of local brokerages to service the needs of the new investors. These brokerages, while entrepreneurial, energetic and ambitious are often too small to gain access to a Prime Broker.”
Mr. White believes Invast is perfectly placed to take advantage of both of these transformations. Indeed, “We have the expertise, balance sheet and systems to design and deliver customized solutions to small and start-up brokers across the globe. As a listed entity, based in a highly regulated jurisdiction, we present a much more attractive proposition than many of our competitors in the Prime-of-Prime space,” he noted.
Moreover, “We already service numerous clients in places as diverse as New Zealand, Cyprus, Turkey, Malaysia and South Africa. Whether through acquisition or natural growth, we have plans to open offices in Europe and the Middle East in 2016. It is an exciting time in the 50-year history of the company.”
The PoP space in Europe, namely the UK is a very competitive market. However, not all of the groups operating there are equal, a point underscored by Mr. White. “Few of our competitors are listed entities with strong balance sheets. The PoP space is historically populated by small US and UK-based boutiques. Very few of these have the core of their business built around their own large retail client base like is the case with Invast.”
Furthermore, “Our large retail client base in Japan – and the huge flows they generate – means we are an important client to our PBs. This means we enjoy strong, stable PB relationships and great bargaining power with regard to PB fees and other aspects, such as margin requirements. We also enjoy great relationships with our Liquidity Providers as a result of our large volumes. We pass these benefits through to our clients – tight spreads and ultra-competitive, stable conditions,” he added.
“We are the first of the highly regulated Japanese brokers to move into the Premium/Prime-of-Prime space. I would be surprised if others don’t follow, given our success. We have the jump on the rest, but we certainly aren’t resting on our laurels. We think the other Japanese powerhouses are likely to shake up the PoP industry, so we are making sure we are investing in staff and technology to make sure we maintain our lead.”