Exclusive: IS Prime Exploring Broader Crypto Offering, Growth Continues into 2018

Managing Partner Raj Sitlani shares some more insights after the company's stellar 2017 results.

Earlier this week, institutional-client focused prime brokerage and execution venue IS Prime reported its financial results for fiscal 2017, showing material growth in revenues. The reporting year that ended for the company in March 2017 was a significant milestone for the company as it repaid its initial seed capital loan worth £3 million. The funding was received from the firm’s major shareholder International Standard Asset Management (ISAM).

Only a couple of years after launching, IS Prime doesn’t have any outstanding debt, and last fiscal year the company reported its turnover almost tripled compared to the previous one to just below £17 million.

Raj Sitlani
Raj Sitlani

Curious on the latest developments for the company since the end of the fiscal year, Finance Magnates has reached out with some questions for the company’s management. The firm’s Managing Partner, Raj Sitlani, replied elaborating on the latest trends in the industry.

What are the trends in trading volumes of the company so far this fiscal year? Has low volatility overall impacted the company’s growth figures for fiscal 2018?

Volumes have been steady to a little higher so far this fiscal year, which in light of the low volatility is a solid achievement. This can in part be attributed to a succession of new clients coming on-stream together with existing clients maintaining their trading and hedging levels of activity. The current geopolitical risk indicators are increasing to quite strong levels and this, combined with central bank machinations, will hopefully lead to greater volatility over the coming months.

Have you considered adding cryptocurrency liquidity and what are the main challenges in that space?

The main challenge currently surrounding cryptocurrencies is that there are such significant wallet security and counterparty risk issues. It is hard to determine whether these risks outweigh the market risk that you offset by hedging.

There is therefore clear value in a regulated, credible, tech-savvy counterparty such as IS Prime offering a liquidity product in these assets.

We already provide liquidity in BTC which forms part of our Index Swaps premium suite of products, however several of our key clients have asked us to investigate providing a broader range of cryptocurrencies. We are currently scoping out a project to offer all cryptocurrencies. Once we have fully weighed up all the pros and cons we will decide on whether to move forwards or not.

Do you see any new technological developments that could disrupt the industry?

We do not see any new technological developments that could disrupt the industry. As a firm at the forefront of risk and trading technology, we are confident that we are very well placed for any changes that may arise. Our teams are constantly monitoring industry trends and are fully focused on subjects such as blockchain which may have broader implications for the financial markets.

Do you think that the new EU regulations for retail brokers will affect IS Prime or are your clients mainly outside of this sector?

In our experience regulations will always initially impact our retail broker clients but as time goes on, these brokers assimilate well to the new rules and regulations and business continues to flourish. If the regulators are implementing restrictions, for example on leverage, it is with very good reason. As an FCA regulated firm we embrace any initiative that helps clean up the industry.

We have a strong and diversified client base consisting of brokers, proprietary trading businesses, hedge funds and banks. Given that retail brokers are only one type of client to whom we cater our services, we are not particularly worried.

What about Brexit – with the exit deadline looming, do you foresee additional risks on that front?

We don’t think anyone can say with any credible amount of conviction what the ramifications of Brexit will be. Everyone has totally underestimated the challenges ahead. As such it is nigh on impossible to work out what risks are out there. We just have to take each day as it comes and remain nimble and commercial in our business decision making. We don’t foresee any material changes for quite some time.

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