Gavin, you are CEO of Invast Global but have also recently been promoted to Global Head of Strategic Relationships for the Invast Group which is a huge endorsement from your parent company. What do your own day to day responsibilities now involve?
My day to day responsibilities are still predominantly associated with leading the team at Invast Global in our efforts to grow our firm into a significant player in the multi-asset prime services space and to provide an alternative to the bank PBs for those clients who are being overlooked or not adequately serviced by the banks. My new Group role is an extension of my membership of the parent company Board and involves leading all negotiations worldwide with respect to vendors, financial counterparties and implementing our strategic initiatives with partners. It is an honour to be given that responsibility and I am relishing it.
Invast has clearly tapped into growing global demand for independent alternatives to the traditional Investment Bank Prime Broker offerings but is your success simply down to being in right place at the right time or are other factors at play here?
As with most successes, there is certainly an element of fortuity. However, the ability of our management team to foresee the changes that have occurred in the investment banking space over the past five years and position our firm to take advantage of these changes, cannot be overlooked. That was the result of hard work. Researching the main drivers of the industry change, that is, mainly but not solely, the global regulatory reforms which have begun to be implemented, was something we have invested a lot of time and effort into. We assembled a highly knowledgeable team of investment bankers from diverse backgrounds and set about purposefully building the right infrastructure, access and client base. It has been a very satisfying achievement, but we are certainly not finished. In fact, it really is just the beginning. We believe Invast Global is exceptionally well placed for the future.
In what ways does your Japanese heritage influence the culture of Invast Global and the way you and your colleagues conduct business?
Our parent company began life more than 60 years ago as a family-owned business. It is now a public company, listed in Japan. This family-based heritage is as much of an influence on our culture as is the Japanese heritage. President and CEO of the parent company, Takeshi Kawaji, has had a strong influence on our culture. There is a determined focus to be a company which does good things by its employees and its clients. There is a focus on integrity, both in terms of abiding by our regulatory, governance and fiduciary obligations as a company, and abiding by our personal commitments by fulfilling our promises to our staff and clients.
Aside from that strong sense of morality and responsibility, our Japanese heritage has the benefit of exposing our team to the industry-leading technological expertise within our Japanese entity. Invast Global and our clients have benefited enormously from the input and guidance of our Japan-based technology and development team. It has allowed us to stay ahead of our peers in many important ways and differentiate ourselves by our technological competency and familiarity with the latest advances, to provide the highest quality connectivity, reporting and service offering.
Who are the key members of your global executive team and what roles are they playing in helping you to grow and develop the business?
The day to day operations and strategic planning of Invast Global is predominantly undertaken by our 4 C-level executives, Jon Leung as COO, James Alexander as CCO, Nick Briscoe our Global Head of Prime Services and myself. All four of us have spent our careers in various Investment Banking roles across the world and have been together as a team for many years. We are very close-knit and all feel very appreciative of the unique relationship we have.
Of course, Takeshi Kawaji has been instrumental in empowering us to reach our goals. In addition, our global CTO, based in Japan, Younes Hairej, has also had a major input on the technology side.
What skillsets do you think are particularly important for managers on your side of this industry and how important is it to build a team that adds value to the business rather than just more experience?
Cultural fit is by far the most important quality we look for when we are hiring. We are not like a traditional investment bank. In fact, we are purposefully different. We do not want a team of cut-throats or mercenaries. Nor do we want to take on board anyone who is not fully understanding of, and passionate about our opportunity in this space. Our team of almost 40 staff at Invast Global comprises executives from 16 different nationalities. The team has been hand-picked without the assistance of recruitment agencies. It is an amazingly energetic and productive group, relaxed but highly-professional.
Nick, as the Global Head of Prime Services, you are the principal point of contact for your clients. Please tell us a little about how diverse your client base is and the range of services you currently offer for them.
We service a genuinely global client base of brokers, asset managers and proprietary trading firms across more than thirty jurisdictions. There isn’t one region that dominates as the regulatory tightening that has occurred for the traditional bank prime brokers has had a global impact, resulting in demand for our services throughout the traditional financial hubs, as well as in other fast-growing regions.
We provide access to a multi-asset prime facility covering OTC FX and metals liquidity, global equity and futures markets and highly specialised alternative liquidity across both OTC and listed products.
All of this is delivered with an unwaivering commitment to providing clients the highest possible levels of service and ensuring that their costs to trade are minimised by us running an efficient, automated business in the areas clients want it to be, such as onboarding, whilst still providing the ‘high touch’ style services in areas such as trade execution and bespoke liquidity structures.
PurePrime is your premium multi-asset prime services facility. What makes it a unique offering and different from many other solutions in this space?
PurePrime is named as such, because we have focussed on transparency and integrity across every element of our offering. Our revenue model is very open and our clients see where we are adding value and how we are compensated. Our focus is squarely on the client and fulfilling their specific needs. Our outlook is long-term. We strive for sustainable long-term relationships with all of our clients and our business partners. This has undoubtedly been one of the main factors in our success.
Some of your clients are managers that are just establishing funds. What benefits do they get by using a non-bank prime broker and why is Invast Global so well positioned to meet their needs?
We have focused on being flexible and providing customised solutions to our clients. That applies across all elements of our offering, from connectivity and technology, to collateral solutions and high-touch services. The banks do a great job with the very large clients, but with the growing impact of global regulatory reforms such as Basel and MiFID, the banks are finding it very difficult to provide the requisite resources and attention to the small/medium end of the industry. Whilst our focus on the small/medium and emerging sector is profitable for us, it is also rewarding to know that we are providing much-needed support for managers who would otherwise be overlooked.
How important is it for your prime services team to ensure that their commercial agreements with clients facilitate long-lasting relationships and how do they go about keeping the interests of Invast closely aligned with your clients.?
Our culture of openness and transparency is what builds trust in our client relationships. Nobody enjoys dealing with a person or company that they feel cannot be trusted or believe will only be a short term relationship – it is all just hard work for no gain, which is exactly why I think our PurePrime product has been so successful because many in the industry viewed it as a refreshing change. The commercial negotiations and maintaining an alignment of interests is actually very, very straightforward if focus is maintained on this open and transparent culture at every step of the relationship with clients.
High levels of customer service are clearly an area that sets Invast apart. Do some clients benefit more than others from this?
Absolutely not. Everyone receives the best possible service. We know this is our strength and it is why we have achieved success, so the whole team works hard at it. Of course, things go wrong at times, but when our clients know we are holding ourselves to high standards, they are more understanding when the inevitable, thankfully rare, issue occurs. Urgency and client service are core principles of our firm. Its why we assess personality and work ethic as a priority when we recruit new staff. A client-centric team spirit is one of those intangible, but hugely valuable qualities that we have worked hard on.
James, in what ways do the FX liquidity needs of brokers around the world tend to differ quite significantly and why is that?
Surprisingly, every one of our broker clients is different. Each has different risk thresholds, meaning they internalise and hedge to varying degrees and with divergent methodologies. This results in each of them having individual needs with regard to the liquidity streams they are accessing. Those who internalise less want tight top-of-book, to allow their small client trades to flow through effectively. Others who internalise more and then send larger hedge trades through, are much more concerned about depth and minimal market impact.
We constantly provide analysis to our clients and advice as to the optimum structure of the price feeds we provide. Some LPs just want the small trades and show tight TOB pricing, others are keen on winning the bigger flow. Some LPs have a higher appetite to warehouse flow, whilst others essentially quote and cover. Its quite a complex process to get the right mix – and it takes constant open communication with both our clients and the LPs. This is undoubtedly the strength of our offering and the benefits of focusing on this open communication and analysis is significant for both clients and LPs. Of course, we show our LP names to our clients pre-trade and post trade, so clients can request changes live, on the fly, if they think their mix isn’t optimal.
Invast Global has demonstrated strong support for the concept and spirit of the FX Global Code of Conduct. In what ways have bank focused regulations and industry initiatives for more market transparency played into your business model and are helping you to win greater market share?
Quite simply, our existence is a product of the regulatory reforms.
Global, systemically important banks are being heavily affected by the reforms. Just like the Glass-Steagall Act reforms which were a reaction to the crash and bank defaults of the late 1920’ and early 1930’s, and were in existence for many decades, we believe the current reform cycle is a long-term change to the industry. We are confident that bank alternatives will be in demand for many decades to come. The household names of the future are being forged right now. We expect Invast Global to be one of those.
Within Invast there is a preference towards using LPs that have also stated their adherence to the FXGCC. What practical benefits do your existing clients get from the firm taking this stance?
Again, I think this speaks clearly to our values about transparency and holding ourselves and our counterparties that our clients are ultimately trading with, to the highest standards.
From a purely practical perspective, very few if any, of our competitors have similar policies in place so it is a key differentiator and whilst adherence to such standards may potentially cost us some business in the short term, we are firmly of the view that maintaining such standards will benefit our clients and Invast Global in the long term.
Many FX market participants now have to address regulations like MiFID II and the need to demonstrate best execution. How is Invast Global able to optimise the way that your clients execute their strategies using the best liquidity, at the best price?
Clients have full transparency to their underlying liquidity mix, pre and post trade. We help them analyse the results of their trades to ensure their liquidity mix is optimised to their needs. Giving clients transparent access to as many bank and non bank LPs and ECNs as we do, is what helps ensure their execution is undertaken with the interest of the client as the priority.
What work have your Liquidity management team been undertaking over the past few months to enhance your bank and non-bank Liquidity Provider (LP) mix?
We have just launched an aggregated, streaming Full Amount (FA) feed for a number of our clients that are looking to trade in larger sizes than a sweepable feed can accommodate optimally. For this process we engaged with half a dozen LPs that have a significant appetite for internalising risk and asked them to stream a number of FA amount quote sizes, generally in quote sizes of 5, 10, 20, 40 and 60 mio. Our clients then see a number of streaming quites for these sizes that they can hit on a FA basis. The benefit to the client is that rejections and slippage are virtually non-existent, and the right LPs love this type of flow as there is no market impact considerations.
The Dealing team have also been finalising the build-out of our TY3 liquidity hub, which complements our servers in LD4 and NY4. We have a policy of only every connecting LPs to an aggregation hub that price out of that same centre and the same holds true in TY3 where were have connected the bank and non-bank LPs that also have a pricing engine in TY3 to our liquidity hub. For clients throughout Asia and Japan in particular, the latency reduction in such a strategy is material significant.
Jon, in what ways does Invast leverage new technologies to improve transparency, optimise the execution strategies of your clients and help strengthen relationships with them?
The adage that ‘we’re running a technology business’ is an old and often overused one, but it absolutely has to be true within any leading financial services company right now or they simply will not survive. We’ve invested a huge amount of capital into building out our own integrated reporting, risk, treasury, transaction cost analysis (TCA) and liquidity tools for internal use and we make components of this system available to clients where it adds value for them. The development team within Invast Global is one of the single largest teams and this in-house capability provides us enormous flexibility to deliver solutions in a timely and cost-effective manner. The TCA and liquidity analysis tools are especially valuable to enable sophisticated analysis of every aspect of an aggregated price feed. These tools have proven themselves to be incredibly valuable to build the relationship with our clients and have meaningful conversations with them about liquidity, but in our view, we’ve only just scratched the surface of what our highly motivated development team is capable of.
What about business partnerships? How proactive are your team in exploring relationships with other firms that can facilitate your overall philosophy of innovation and ways of seeking new liquidity sources to help clients with their trading needs?
We always take a meeting.We never assume we are doing things as best we can.
Partnerships help you evolve and improve. So, we are very proactive in engaging with the wider FX community and keeping our minds open to all possibilities. We have an internal motto that “there is always a solution”. So whenever we come up against a hurdle or a tricky problem, we explore all avenues to resolve it – and that often means collaboration with partners and vendors.
Invast has won a lot of awards which for many is confirmation that the quality and range of the services you deliver is hugely appreciated by your clients. How can you protect and nurture that trust and loyalty?
We simply need to continue to do what we are doing. Communicate effectively and often with the clients and LPs. Cultivate an internal culture of urgency, transparency and integrity. It sounds simple, but it takes focus and dedication from the whole team. We are very tight knit and each member of the team hates nothing more than letting down the rest of the team. That mechanism is very effective in ensuring our quality of service is maintained at a very high level.
Gavin, which parts of the world are going to be strategically important for your global growth agenda over the next few years?
There are three main regions we are focusing on, beginning in Asia where we already have a strong foothold. We have offices in Tokyo and Sydney, and by Q1 2019 we will have a fully-fledged office up and running in Hong Kong and a representative office in Shanghai.
Our attention will then turn to Europe and the Middle East. Our client base is very geographically diverse, so every effort is being made to ensure we are physically present wherever our clients are.
Finally, what steps will you be taking to ensure Invast remains a global leader with a sustainable business in this highly competitive marketplace?
We intend to continue to follow our business plan, which foresees enormous opportunity in our space, as the large banks continue to contract and clients continue to demand higher quality, more bespoke products and services. Simply, we intend to continue to do that same thing, focus on our client’s needs with determination and integrity – and roll that philosophy out across more and more business units, as these functions continue to shake loose from the global investment banks.