“I’ve been in the retail trading industry for about twenty years,” said Lars Holst as we began our interview. “We’ve had two decades of ‘broker-in-a-box’ services, but not much has changed. So this is going to be like ‘crypto-in-a-box.’”
‘This’ is Holst’s latest venture – GCEX. Based in London, the company is going to be providing a complete set of services, from liquidity and trading platforms to hosting and KYC solutions, for professional traders and institutional firms.
Most of our readers will already be familiar with Holst. After stints at Saxo Bank and Dresdner Kleinwort, he founded prime of prime broker CFH Clearing in 2009. Holst spent close to a decade as the firm’s CEO but left last year, having sold the company to TradeTech for $120 million in 2016.
“Taking things to the grown-up world”
The Dane’s new venture will build on that experience. And, after launching last week, GCEX has already managed to onboard 16 clients that Holst described as “people we know.”
“Let’s be honest; there are a lot of cowboys in the crypto space,” said the Dane. “But that doesn’t mean there isn’t a lot of appetite among institutions for crypto trading. It’s just that they don’t want to do it with some offshore entity.
“We see ourselves filling that gap by taking things to the grown-up world. People know my team, they can see we are regulated by the Financial Conduct Authority and that we understand their technological needs. In simple terms, they trust us.”
With ties to several major liquidity providers in the cryptocurrency space, GCEX can provide cash instruments or CFDs to its clients. Still, the company is by no means the first to enter into the institutional-oriented market for digital assets.
The first institutional service
Many major crypto exchanges have an institutional offering. There’s also a few market makers that claim to be working with institutions. That being the case, I asked Holst if he isn’t worried that he is a bit late to the party with his new venture.
“I don’t think so,” he said. “Clearly, we are not a ‘first mover’ in the cryptocurrency space, but we are the first to provide a proper institutional offering. We aren’t, for instance, running risk. Many of these ‘institutional’ companies have an exchange in one room and a dealing desk in the next.
“But I think the most exciting part of GCEX is our technology. There’s no legacy systems; everything is new and was built from scratch. We have a great team of researchers and ties to academia. These are things that professional and institutional clients love to see and want to work with.”
Hedge funds and asset managers
Like so many other marketing terms, the word ‘institutional’ is bandied about a lot in the retail trading space – so much so that in many ways, it is hard to know what it means.
CFH Clearing, for instance, largely deals with retail brokers. Those are clearly ‘institutions,’ but they aren’t necessarily the first sort of business that comes to mind when one thinks of ‘a financial institution.’
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Expecting a client base more akin to the one served by his prior company, it was interesting to hear Holst describe the sorts of firms that are looking to do business with GCEX.
“You would be surprised by how many people are looking at this market,” said Holst. “Yes, there are the CFD brokers that want to expand the number of product offerings they have – that’s almost a given.
“But we’ve also had hedge funds and asset managers show interest in what we are doing. The fact that that they can contract with an FCA-regulated company that understands their needs is very appealing.”
Friends and partners
Though he wouldn’t name any names, Holst told Finance Magnates that his new firm expects to onboard several of these sorts of institutions very soon. But it’s not just the number of clients that are growing, GCEX is also bringing in some more staff members too.
Currently, the firm has a team of ten people in London, including ex-Cobalt technology expert Alex Gallagher-Lynch and Robert Brown, who was part of LMAX’s sales team for almost a decade.
“We’ve mostly brought in people we know from our professional lives,” said Holst. “So, there are a couple of people on our team from the FX world, but we’ve also got two guys that have experience with crypto.”
Personnel aside, Holst’s firm has also forged several technology partnerships. The London-based company is already working with, amongst others, MetaQuotes, oneZero and Beeks Financial Cloud.
It was muinmos, however, that Holst was most eager to discuss. A KYC technology company, muinmos, was launched in 2012 by Holst’s CFH co-founder Remonda Kirketerp-Moller. Holst also sits on the company’s board of directors.
“This is one of the most important technological components of the service that we are offering,” said Holst. “KYC is bad enough when it comes to traditional asset classes, but for crypto, it’s a whole other story.
“Again, I think it goes back to us offering a proper institutional service. muinmous allows you to almost instantly assess whether or not you can onboard a client. That’s the sort of tool that the customers we are looking to work with expect to be given.”
I closed our interview with a more philosophical question. After selling CFH in 2016, Holst probably could have disappeared off into the sunset and enjoyed the good life – so why the interest in starting a new venture like GCEX?
“You look at our industry, and it’s actually been quite stagnant for a long time,” said Holst. “It’s boring to watch people do the same thing over and over again. This is a chance to do something fresh, and it’s also an opportunity, with crypto, to bridge the gap between the old and new in the financial services industry.”