Being based in Chicago is ideal for a firm like Turnkey Trading Partners that specialises in supporting the many needs of derivatives firms looking to operate within the CFTC and NFA regulatory environment.
The firm’s founder, James Bibbings (pictured), says that it is a pre-requisite that all members of staff have “an extensive background in derivatives operations before joining us. Our depth of experience in the derivatives space means that when new regulations come out we can quickly discern their impact, both operationally and from a regulatory perspective, for our clients.”
Turnkey provides regulatory consulting, brokerage and fund accounting, as well as marketing solutions to name a few of its many service offerings. “Our people have experienced firsthand virtually everything there is to experience within the derivatives market. Any problem that might come up we’ve probably dealt with it previously.”
Turnkey’s industry involvement has placed it at the forefront of regulatory change. Bibbings couldn’t get into specifics but indicated a Turnkey swap brokerage customer was recently utilised as an NFA model for its ongoing swap audit practices; only the second swap firm in United States’ history to be reviewed by its new regulator.
Turnkey is a “go-to” provider for clients faced with the onerous task of deciphering and implementing the CFTC’s evolving Dodd Frank regulations; principally with respect to OTC clearing and what is being termed the “futurisation of swaps”.
“We believe Turnkey is at the cutting edge of developments in the move towards the OTC clearing of derivatives. Early last century the stock market was the main asset class for investors to create wealth, in the 60s and 70s that asset class was futures. Then it was cash commodities, international currency trading, and now I firmly believe the next big opportunity lies in swaps,” says Bibbings who goes on to state that the firm this year has been fielding a lot of calls from clients looking to set up swap funds.
“Our customers are looking to bring smaller investors into the swap market which has traditionally been an institutional space. That’s where the bulk of our time and research has been spent so far this year.”
As it’s name suggests, Turnkey’s core business has been developing emerging managers, who have little or no infrastructure, and helping brokerage clients integrate their day-to-day operations. Providing a start-up package enables customers, says Bibbings, to leverage the company’s expertise, saving them both time and money.
“Clients are incubated until they are introduced to our more established clientele.
“Our services let managers and brokers worry about what they are best at: trading and raising money. Our goal is to focus on what we’re best at: operations and regulation. No pun intended, our customers’ experience with us was designed from day one to be ‘turnkey’.”
Bibbings says that one of the key concerns of hedge fund managers with respect to OTC swap clearing is the additional cost of having to post initial margin.
“Our clients are increasingly concerned about the rigidity of futures contracts. Namely that there might be fewer opportunities for them to hedge using contracts with the right terms or notional size relative to what they would have had in the OTC market. Some estimations suggest it could cost as much as five times more to bring OTC swaps into the cleared space.”
On winning the award, Bibbings says: “It’s a huge honour and a direct reflection of the quality of our work to be selected. I hope we’re able to continue to satisfy our clients and win many more of these awards in the years ahead.”