LeapRate Exclusive… Paul Jackson has over 20 years’ experience in the financial markets including almost 5 years at CFH Clearing where he was a member of the management team, with responsibility for assembling and managing sales. Prior to CFH, he used to work at LMAX Exchange and CMC Markets as well as over a decade as an FX trader, both at CMC Markets and Nationsbank.
He joined IS Prime, part of ISAM Capital Markets, as Sales Director back in April 2019. Paul has exclusively shared with LeapRate some details about the company’s aggressive growth and PoP brokerages in general. Read the complete interview below:
LR: Hi, Paul, and thank you for joining LeapRate today. Prior to IS Prime, you used to work for companies such as CFH Clearing, LMAX Exchange, CMC Markets. What attracted you to IS Prime in the first place?
Paul: Having worked for a number of peers, I often competed against IS Prime for business so I had a fairly good understanding of their competitive pricing and commercial appetite. That said, I wasn’t aware of the full extent of IS Prime’s success until I arrived and it is truly staggering to see the incredible growth that the team has achieved since setting up the business just five years ago.
The opportunity to join IS Prime came at precisely the right time for me. I was keen to be part of their growth story and to continue to drive the firm forward. As Sales Director at IS Prime, I have a broad global remit, covering multi-asset trading on both Prime (margin) and Agency (giveup) business.
LR: You joined the company earlier this year, back in April to be exact. What has changed at IS Prime since then?
Paul: The biggest changes are the fact that we have aggressively grown our global sales team, increased our focus on marketing and have continued to develop our liquidity on both the Prime and Agency desks. Client service has always been a key focus for IS Prime and we have increased our client interaction and have more cohesive team planning.
Despite low volatility in the market, the business has continued to grow in terms of both volumes and revenues. We’re very proud to have recently won two prestigious industry awards – FX Week’s ‘Best Prime of Prime Provider of the Year’ and the Profit & Loss Readers’ Choice Award for Best FX Prime of Prime Services. We have also been included in the London Stock Exchange Group’s list of ‘1000 Companies to Inspire Britain’. These external endorsements are significant achievements for the business and will be a catalyst for future growth.
LR: IS Prime is an FX Prime of Prime services provider. Based on your experience, can you give us a good overview on different Prime of Prime models?
Paul: A Prime of Prime essentially has a direct credit relationship with a Prime Brokerage (clearing bank) and can access a range of Tier 1 liquidity. What a Prime of Prime then does with these connections and the additional services they offer is what really differentiates them.
To become a Prime of Prime, you typically need to be an established, regulated company with a good business track record and a strong balance sheet. You must also be able to demonstrate adequate operational and risk controls.
IS Prime is fortunate to be part of the ISAM Capital Markets Group, which is owned by ISAM, a multibillion dollar FCA regulated hedge fund. As a result of our balance sheet and the strength of our relationships, IS Prime is able to acquire the very best pricing and execution from all the major Liquidity Providers. We have developed our own proprietary matching engine and have integrated into leading third party technology firms, making it easy and cost-effective for institutional clients to access first rate, customised liquidity from anywhere in the world.
In terms of the varying Prime of Prime models, some Prime of Primes give direct access to underlying Liquidity Providers whereas others act as an intermediary broker and principal counterparty. Some use their own proprietary technology whereas others rely entirely on third party technology. There’s also a difference in the terms of the products and value added services which Prime of Primes offer.
The varying models can cause confusion for institutional clients looking to select a Prime of Prime. To address this, we’ve recently prepared a paper entitled, ‘Evaluating a Prime of Prime Liquidity Provider,’ which contains key questions for brokers to ask when looking to select a Prime of Prime partner. It covers a range of areas from corporate structure and operational infrastructure through to products, services and technology. It is available here.
LR: What is the demand for PoP brokerage and why does a broker need a prime of prime?
Paul: One key reason why a broker needs a Prime of Prime is to have a trusted intermediary to enable them to gain access to Tier 1 liquidity – liquidity which they would not be able to access directly themselves.
In terms of pricing and execution, a Prime of Prime can provide much more transparency and neutrality in the treatment of orders than other intermediaries, some of which internalise a large proportion of business and therefore have a direct conflict of interest with their clients.
Increasingly, brokers are asked by regulators to adhere to best execution policies, transparency of execution and a consistent a code of conduct. By partnering with an established Prime of Prime, a broker has the assurance that they are dealing with a well-established, credible firm, with the financial stability to afford a Prime Broker giving security of funds.
LR: What value a PoP can add?
Paul: It is often far more cost-effective for a broker to partner with a Prime of Prime than to have a Tier 1 Prime broker. In addition to the reduced trading costs, there are a host of other benefits which a Prime of Prime can provide. These can include multi-asset liquidity aggregation and customised pricing, low latency execution, business analytics and reporting tools, risk management services and trade support expertise, all of which would otherwise have to be sourced, supported and paid for – a not insignificant cost.
LR: How do you see IS Prime setting itself apart from the competition?
Paul: Our approach to customising our liquidity sets us apart. IS Prime’s ability to interpret and effectively route our customers’ flow ensures that their end clients are executing on the best possible liquidity for their trading strategies – and this can have a significant impact on their revenues.
Our technology also sets us apart. By leveraging the heritage of the systematic and quantitative trading intelligence of our parent company, ISAM, we have developed cutting-edge, scalable and agile technology which is unique amongst our peers. This, together with our ability to integrate and distribute liquidity via established third party vendors, allows us to take a systematic approach to how we route liquidity, how we optimise execution and how we manage risk for each client.
Our management team also stands out. Their foresight, drive and commercial appetite is a key reason for our fast growth and success to date. IS Prime has developed an outstanding reputation for our Prime of Prime services, multi-asset liquidity as well as our industry-leading risk management and analytics. Our end-to-end solution for clients not only enhances their expertise but can also save them money.
LR: Over the past few years, IS Prime has invested heavily in core technology and have developed many advanced risk management tools. What are the company’s plans for the rest of 2019?
Paul: We will continue to invest in our technology and roll out new products and integrations. We anticipate significant growth from our Agency and Voice execution desk, with recent additions to the team in Australia, and the expansion of the product’s technology and liquidity offering.
In terms of our global footprint, Asia has been a strong growth area and we expect this to continue. We also expect to continue to attract clients as a result of the ongoing shift of European Brokers to offshore jurisdictions so they can offer higher leverage to retail clients. A key part of our growth strategy is also to assess opportunities in emerging markets and new jurisdictions.