Following a deal inked in mid-2016 with China’s CFETS for electronic execution services in mainland China, EBS BrokerTec has been actively expanding its footprint and relocating key staff to the region. P&L’s Julie Ros talks with Jeff Ward, global head of EBS Direct and head of EBS BrokerTec in Asia, about the moves.
Recognising the potential for growth across Asia Pacific, EBS BrokerTec embarked on a growth plan for the region nearly a year ago, as the company was working on a deal that would formalise an association with the China Foreign Exchange Trade System (CFETS). Additionally, the firm’s new global front-end, Yuniti, which was announced in February 2015, is providing next generation technology to its clients around the world.
Yuniti is designed to be a fully integrated trading platform that will provide a single screen view of all the liquidity pools in EBS BrokerTec’s portfolio. The first product to go live, forwards, through EBS Direct, launched around 18 months ago, and now has around 65 clients live. Precious metals, NDFs and spot FX are due to be added over time.
Yuniti is forming the basis of the expansion of EBS’s footprint across Asia, and globally, notes Jeff Ward, who oversees both EBS BrokerTec Direct globally, as well as heads EBS BrokerTec in Asia. “Although most of the major banks already have EBS, we are working with them to earn more of their share of wallet and provide a service they can grow and extend their businesses on,” says Ward, “Yuniti means that trading in some of our newer products, like forwards, have tons of room to grow. So, it’s a combination of trying to get new clients in some of the newer marketplaces, as well as cross-selling services to our existing, traditional bank clients in all the major centres.”
Ward, who recently returned to Singapore after several years in London, says the decision to relocate back to Asia grew out of the view that the region is “punching above its weight”.
“Given the growth across the FX marketplace, Asia really warranted having someone from the EBS BrokerTec leadership team based in the region. About one-third of the business on EBS Direct comes from the region – across spot, precious metals and now forwards – and that comes from a broad client set across Asia,” explains Ward. “Our traditionally strong footprint in Japan helps a lot, but across Greater China, India,
New Zealand, Australia, and the financial centres in Hong Kong and Singapore, we are seeing significant growth in overall activity and volumes. This region has a lot of great potential – it’s not only a story about the emergence of the RMB as a reserve currency, but there is growth in Asia overall.
“So interestingly, after being away for four or five years, Asia has gone from what some felt was a sleepy backwater in global FX, to a place where things are happening and markets are moving,” he says, adding that more than half of EBS’s business in Asian NDFs comes directly from the region.
“On the forwards side, we initially had success in Asia because we already had a very good footprint and relationships into a lot of global and regional banks here, so we ramped up the team under Peter Phelps, which has been great for the product’s growth,” he adds.
Buy Side Focus
EBS BrokerTec’s approach to Asia Pacific is split into two sub-regions. Asia Oceana is now headed by 12-year EBS veteran Laurence Timmons, who recently relocated from London to Hong Kong to take up the role of head of sales for Asia Pacific.
Ward says Timmons is focusing on extending the footprint with real money and asset managers, as well as corporates, through EBS Institutional and EBS Treasury, respectively. “There are big superannuation funds in Australia that invest in money markets and term deposits, as well as trade FX, so that’s one area that is very attractive for us,” says Ward.
“Then, there’s a lot of international treasury centres, as well as either homegrown Asian asset managers, or local offices of big global operations that are based in Hong Kong or Singapore, so the buy side really comes from across the major financial centres in Asia,” he continues. “The needs of the clients and how they operate is local, so we need to have people in each major market or region to cover and support them.”
Ward explains that until recently, uptake has been slightly behind the curve in terms of electronic trading by some buy side segments in Asia, but feels that the new platform will help attract these customers. “The fact that we now have solutions that are next generation gives us confidence that we can be successful with these clients,” he says.
Meanwhile, 26-year veteran Kazuhiro Ooki, who heads sales for Japan and Korea, has been focused on building the firm’s reach into the retail segment, as well as traditional buy side. Ward notes that the Japanese corporate client base isn’t as electronified as some other regions, so this is an opportunity as well.
“One area of new business is from the retail aggregators. We’ve recently gone live on EBS Direct with three of the top 10 retail aggregators via our new FIX API. That is not a client base that we traditionally saw on EBS Market, but now we’re seeing great growth and have a good pipeline of retail aggregator clients out of Tokyo that are coming onto the platform and trading with EBS Select and EBS Direct liquidity providers,” says Ward, adding that about one-third of the activity on EBS Direct now comes from Asia.
“Laurence and Kazuhiro each have a group of sales people that work across the region, with a concentration of staff in Hong Kong, Singapore and Tokyo, but also with people in Sydney, Mumbai and Korea. Additionally, we have leaders within teams, such as David Walden, who heads our Asian NDF efforts, and Robert Siddons, who recently moved from Hong Kong to Singapore, to incorporate the BrokerTec Asia team within the Nex Group regional headquarters,” Ward says.
Looking at China, Ward calls the CFETS deal a landmark in that together EBS and CFETS will be developing “a next generation trading platform for the OTC market in China”. The company has established a new entity in Shanghai and will be ramping up its staff there. “While I can’t predict a timeline for liberalisation, I think the renminbi will become the most important trade currency between Europe and Asia, and between the US and Asia, adding to the importance of USD/JPY and EUR/JPY in terms of trading volumes,” says Ward.
Meanwhile, he sees a future for the offshore market as well, with Hong Kong maintaining its position as a key financial centre. “The historical legal framework under English law and the proximity to Mainland China means we will see an offshore and onshore market for a number of years, even as Chinese policymakers take steps to further liberalise, because it makes sense to have an offshore trading centre that’s part of Greater China. So, I think you’ll see some US, UK and European banks continue to headquarter themselves there for the foreseeable future.”
In terms of Singapore’s importance to the region, Ward notes “a healthy rivalry” between Singapore and Hong Kong when it comes to attracting financial firms. “In terms of market and business development, both the MAS and HKMA have made it very attractive to operate in both centres,” he says, adding, “Singapore seems to be orienting itself towards Southeast Asia as a major financial centre, while Hong Kong is orienting itself very much towards North Asia and China.”