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Gavin White, Invast

Prime Services Q&A with Gavin White, Invast CEO

HW: What are the core services that Invast offers to financial clients? 

GW: Invast is a global, multi-asset Prime Services provider. We provide credit intermediation, access to liquidity (both OTC and exchange), sophisticated trading platforms/ API connectivity options, administrative/back office tools and services, and an experienced Prime Services team to support clients globally. We complement these services with high quality global equity, FX and commodity research.

We focus on being responsive and flexible. That is definitely our niche. We are squarely aimed at meeting the needs of small and medium-sized hedge funds that are being overlooked by the large Tier 1 Prime Brokers as regulatory reforms begin to take effect.

If managers are lucky enough to be accepted by a Tier 1 PB, they are increasingly being hit with prohibitive minimum commission hurdles and other requirements.

Invast provides an alternative for these clients. Being specialized and more agile, we can provide these services with the same integrity at the top-tier Investment Banks, but with more responsiveness and attentiveness to the needs of different clients.

HW: You run a number of different platforms. Which do you regard as the most pertinent to alternative fund managers?

GW: It depends on the asset class the manager is focusing on.

We have a comprehensive synthetic Equities and Futures platform, which gives our clients long/short DMA access to 30 Equities and Futures exchanges across the globe. We instantaneously hedge on the physical exchanges via the execution pipes of our Equities and Futures Prime Brokers and clients receive live, level-2 pricing.

We have an extensive borrow inventory sourced from our PBs, which is loaded to the platform before market open, allowing for easy one-touch shorting.

When a client places an order on the trading platform, it is sent immediately to the exchange’s Order Book. Clients can see where they are in the exchange queue and they know immediately when their order is filled.

All of our client trades are reflected in the official “Course of Sales” of the underlying exchange. It is the most transparent and accountable way of trading synthetic equity and futures which is why our offering is so popular amongst Hedge Funds and HFT firms.

Our OTC FX/Commodities platform is really making waves in the Prime-of-Prime space.
This is because we give our clients a level of control and degree of transparency that is unprecedented in the PoP space. For example, we give clients access to more than 20 bank and non-bank FX Liquidity Providers (‘LPs’) and allow them to structure their own liquidity mix in real time, with analysis and advice from our expert liquidity team.

Clients are able to see the real LPs within their aggregated feed, both pre-trade and post-trade. This is revolutionary transparency for Prime-of-Prime clients – and ensures there are no hidden mark-ups.

We know the FX and Commodity LPs intimately. Most of our staff have worked at the Investment Banks who are streaming us prices. Our Head of FX Liquidity, Geoff Last, is arguably the longest serving (and most respected) institutional FX dealer in Asia Pacific. 

We are a solid and respected counterparty, so we are easy for the LPs to onboard. In addition, we STP everything straight to the LPs, which means we do huge volumes with our LPs and they know they are getting all the flow - not just the "hard" flow. We have no mandate to take on market risk ourselves and pride ourselves on always aligning our interests with our clients. If our clients receive a bad fill from an LP, or too many rejections, we are straight on to that LP seeking a better outcome for the client.

We utilise numerous institutional systems to provide a wide range of connectivity choices for our FX and Commodities trading clients. We have servers in three Equinix locations – LD4, NY4 and TY3. We offer the highest quality API connectivity to industry leading aggregators and bridges, such as Flextrade, Integral, PrimeXm etc, with cross connection and co-location options. 

HW: To what extent are you able to provide research capabilities to the buy side community?

GW: Research is important, particularly as many of our clients are not of a size where they can efficiently develop multi-asset research capabilities in-house. So we have invested in a top-tier research team, staffed by some of the most experienced analysts in the industry. Their focus is on providing high conviction, actionable advice. 

Around the clock, the team is constantly monitoring global markets and debating trade ideas. Our clients benefit from daily access to the “live” discussions amongst the analysts via the client-only “Hot Notes”. Separate research teams cover the various equities markets across geographic regions, as well as the macro asset classes of FX and commodities.

HW: Could you briefly explain a few of the key services of Invast’s prime-of-prime offering? 

GW: In short, we provide transparent, accountable and customizable access to industry-leading OTC FX and Commodities liquidity as well as DMA synthetic access to a comprehensive range of global exchanges. All from the one account, designed specifically to meet the needs of small and mid-sized managers who are being overlooked by the large Investment Bank Prime brokers. 

The offering is supported by a highly skilled team with deep Prime Broking experience and a responsive culture. Our focus is on giving clients control, so that they can customize the offering to meet their specific needs. We think we are at the vanguard of the industry’s evolution. The large Investment Bank PB’s are stepping back and nimble, innovative Prime Services firms like Invast are filling the void.

HW: What do you feel are the benefits to this offering and what has the level of interest been among hedge funds?

GW: Without doubt, there is a large, growing segment of the hedge fund industry in need of an alternative to the traditional bank Prime Services providers. Invast is leading the industry in the provision of high-quality, non-bank Prime Services. Our offering has gained great traction over the past 24 months. It is no accident that this surge in popularity has happened at the same time as the Basel 3 reforms have begun to bite for the bank PBs. 

We believe the banks will continue to retreat from offering Prime Services – most notably in FX and Commodities, but also in Equities and other asset classes. This is not a temporary phenomenon. The prime services industry is going through a huge upheaval and will not look the same again. It is a time of great opportunity for firms like Invast.

HW: How important is it to have the strength of a balance sheet provided by the parent company, Invast Securities Co Ltd, with respect to clients managing counterparty risk? After all, this is something that their investors pay close attention to today.

GW: The fact that our parent company, Invast Securities Japan, is a 60-year old, highly capitalized listed entity is definitely helpful in securing a good deal with our PBs and LPs. These firms know we represent a solid counterparty. We pass these benefits on to our clients, allowing us to provide reliable leverage and access at cost-effective rates. In addition, to help address the topic of counterparty risk, we have designed a range of innovative collateral solutions which clients can utilize to mitigate their exposure.

HW: Finally, how would you describe Invast’s business philosophy? What’s the strategic vision?

GW: We recognised early on that there was growing global demand for a non-bank firm offering professional, transparent prime services for multiple asset classes with the same integrity as the top-tier Investment Banks, but with more responsiveness and attentiveness to the needs of different clients – particularly the smaller firms. 

Since recognising this gap and setting about building a transparent Prime Services firm, there has been an industry-wide contraction in the Prime Broking industry due to regulatory reforms aimed at restraining the too-big-to-fail top tier banks. This has meant a lot of clients have needed an alternative. 

For Invast, it’s been a case of being in the right place at the right time, with the right offering.

It is the first time most of our clients have been given the opportunity to access Prime Services with such transparency and control - that's why we have called our offering PurePrime – it’s the purest form of Prime Services for clients who don't have tier one Prime Broker access themselves. 

In addition, our clients benefit from expertise our team has gained looking after some of the world's top hedge funds at tier one PBs. We know this part of the industry intimately.

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