ADS Securities has one big advantage over many of its competitors: it started with a blank sheet of paper. It could draw its future with an eye to the rapidly changing world in which it was set to operate, while many competitors were playing catch-up, dogged by traditional ways of thinking and working and by legacy systems.
With substantial private capital backing and built by investors and traders for investors and traders, ADS has made rapid progress in attracting an international institutional, professional and retail customer base. And it looks out from its Abu Dhabi base towards the booming markets of the Far East, at its own Middle East time zone and on to the traditional financial markets of Europe, knowing that it has the financial and technological firepower to play a significant role across all of those theatres.
Philippe Ghanem is the Managing Director and Vice-Chairman of ADS Securities. He is known as an entrepreneur and an innovator within the industry. He believes that ADS Securities’ success has been achieved by building a specialist team in the context of current market conditions, new and developing regulatory environments and emerging patters of wealth creation and investment. His vision for ADS’ future is a clear and long-sighted and we asked him to share this with e-Forex readers
Philippe, what are your day-to-day responsibilities within the firm?
Within the team my role has two very distinct and often separate parts. Half of my day-to-day work is about anticipating the issues and getting involved in the detail and the other half is as a catalyst developing the future strategy and direction of the company. This means, for example, that I will routinely walk from a client meeting, discussing trading terms, into a room to explain the work of ADS Securities to an international business delegation. At all stages in the day I track the flow going through the company and follow market volatility. I never want to get too far away from my trading background.
What does this enable you to do in driving the business?
ADS Securities has grown quickly, creating a unique offer in the FX marketplace. This has been achieved by putting together a very experienced team from all the main financial markets. I believe that one of the keys to driving the business forward has been by focusing on bringing together the right people and being very hands on with the issues. The firm is multi-cultural
and by looking at the detail and thinking ahead it has been possible to create a team which can deliver the results in all the main markets and deliver the results shareholders are looking for.
At all stages there is a need to look in the mirror and be very honest about what is being delivered and what can be delivered. This internal review is critical with recent changes to regulations and more stringent compliance requirements affecting many markets. There is no value in developing products that will have restricted access and selling them in markets that will be facing greater regulation. We have to continually look at and assess our offer and where we do business.
What is your vision for ADS?
ADS Securities already provides a range of institutional and retail FX trading services, and is now expanding its range of investment services to offer wealth and asset management. In just two years it’s established itself as the largest, by volume, forex brokerage in the Middle East. My vision for the company is both geographical and product based. We have opened a new office in Hong Kong and Asia, which we see as the most important market for the company in 2014. This position is backed by the move to trade the CNH and to look at developing a range of RMB denominated investment products. Alongside the forex business ADS Securities has developed a very successful Global Markets team, which trades a full range of OTC products and includes a very successful fixed-income desk. In 2014 more investment banking services will be brought online allowing the company to provide a greater range of trading services for clients. The demand from institutions and high net-worth investors is extremely high and the Middle East has the financial strength and the political and regulatory stability to be able to satisfy this demand.
In a nutshell please describe the key achievements of ADS to date.
In three years ADS has moved from trading zero volume to trading many yards a day. The goal is for a further significant increase in flow by the end of the year, making the company one of the leading non-bank forex brokerages. Currently trading takes place on 60+ currency pairs and is supported by a growing number of CFDs. Through the year, our focus will move to ADS Securities new multi-asset platform, OREX Optim, which will offer options, NDFs and a wider range of OTC products. As a private company trading revenues are not published but the company reached profitability ahead of target and continues to expand its offices and offer across Asia and Europe.
Why did ADS decide to base itself in Abu Dhabi and, having been closely involved in helping to create the Abu Dhabi Global Market, the first Financial Free Zone in the area, what is this and what are its objectives?
Capital, stability, time zone and opportunity were all behind ADS Securities’ decision to set-up in the Middle East. Abu Dhabi is very quickly developing into an important financial hub, and has a reputation as a city where you can do business. The company was established by forward thinking local investors who realised that there was a gap for a well-capitalised FX company operating from a regulated and stable marketplace. The geographical location of Abu Dhabi, sitting between the financial centres of the Far East and those in Europe, allows flow to be managed between these markets.
The announcements establishing the Abu Dhabi Global Market, operating from a financial freezone on Al Maryha Island, close to the centre of the capital, is very good news for the region and for ADS Securities. The laws governing the freezone have been looked at in detail and for the first time in the Middle East will closely mirror those in the main financial markets. This will allow clearing and settling, netting, prime brokerages and market making across a full range of OTC products. ADS Securities wants to be able to take advantage of this and to increase its role as a market maker, setting a price from Abu Dhabi across a range of instruments. ADS wants to be a first mover to the new financial zone.
ADS attracted considerable backing in order to launch the business. How much and what benefits has that backing had in enabling you and your team to create a full service brokerage, carefully modelled from the ground up and located in the Middle East?
ADS Securities’ capitalisation has been core to its business strategy. It has provided access to LPs and PBs as well as allowing the company to have a long-term capital (technology) investment programme. All these elements are focused on making sure that ADS sets some of the best prices anywhere in the market and can back these up with strong execution and unrivalled client support. The combination of price, execution and client service are all delivered in the regulatory environment of the UAE. ADS is regulated by the Central Bank of the UAE, which offers strong and workable regulation. Confidence in the UAE and Abu Dhabi is growing all the time, and more and more institutional and high net-worth individuals want to have their accounts and funds based in the country.
Although located in Abu Dhabi, ADS is expanding internationally. Where else is ADS now doing business, how successfully and where will it expand in the future?
ADS Securities is a global business and flow comes from three main geographical regions, Asia, Middle East and Europe. Through 2014 the main area of expansion will be Asia, but we expect growth across all markets. The expansion in Asia is being focused on the new regional HQ in Hong Kong, which is being run by ADS Securities Head of Asia, Desmond Yeo. The office has a category three license issued by the Hong Kong Securities and Futures Commission, and will build on the business which ADS already has in the region. ADS Securities has also said that it wants to look at other markets where it can be regulated, including Europe, and this will be central to the company’s strategy through 2014.
Who are typical ADS customers, where are they located and why has the firm chosen to service these groups?
ADS Securities works with a full range of customers in all the main markets. One of the unique elements of the company is that it was established to service institutional customers. From banks through to funds and corporates, the Optim products meet the requirements of high-volume, high frequency, specialist forex traders. The level of support and service required to manage these clients is then made available to private and high net-worth clients. Emphasis is always on getting the best possible price and making sure traders can execute on this. Market analysis and sales trading support is all built into the package. ADS Securities works with clients in all the main markets from hedge funds in Boston through to Middle East IBs. The company’s mantra is to be able to provide excellence to all clients whatever their access point into ADS. All traders have the same professional support whether they are opening a US$500 account or looking to place a yard a day.
What do traders like about doing business with ADS?
This can be narrowed down to two main points – price and support. The level of client support provided and the aim of achieving excellence is extremely important. ADS wants to give clients the value they deserve. This has to be aligned with the spreads they are trading on and by offering exceptional pricing to all clients. ADS Securities is a company founded and run by investors and traders, so there is a real understanding of what clients are feeling and want. The products and services have been developed by a team that knows what it is like to be on the other side of the screen. Being based in the Middle East, ADS can offer tier 1 bank liquidity, non-bank liquidity and unique regional liquidity. The liquidity is pooled and managed so that it can be aligned to the trading strategies of clients, ensuring that they get the best price as and when they need them. ADS was formed to work with institutional clients and the pricing and support institutions expect is now given to all clients. This is one of the main ways that ADS Securities is able to differentiate itself in a very competitive marketplace.
Why did ADS decide to launch its new multi-asset class platform OREX Optim and will you outline some of its key features and benefits?
Clients need their forex provider to be innovative and to invest in systems that give them a trading advantage. This cannot be achieved if the IT strategy and development is outsourced. You need to have the knowledge and the insight with the company. For ADS Securities, OREX Optim is a long-term project that provides clients with a new generation, low latency platform with better fill, tighter spreads and low rejection rates. The platform was specified and is being developed by an in-house team, giving ADS control of its technology so that it can be flexible to client needs. The new platform offers fast pricing – with latency of 7ms for market orders – and is already providing a 65 per cent improvement in spreads and prices. Advanced monitoring is in place through Corvil and the platform will be continually developed and enhanced. It has been designed as a multi-asset platform, with the necessary interconnectivity covering margins and risk, built in from day one. As traders look to diversify portfolios and for those looking to expand the asset classes they trade, it will provide a very flexible trading tool.
How important is trading technology to ADS and how are you leveraging it to enhance your value proposition?
As clients from retail through to institutional become more sophisticated and demanding the days of setting up a major FX brokerage relying on white-labelled technology have gone. For a company of the size of ADS Securities and with the ambition that the company has, we always knew that we would need to offer proprietary, state-of-the-art trading technology. This provides the flexibility and responsiveness we are looking for. We can work with clients to provide unique solutions, which give them a real trading advantage. Whether it is introducing the latest API or FIX connectivity or the ability to add additional analysis for individual traders, ADS Securities wants to be in control of the solution.
What steps is ADS taking to offer access to new trading and investment opportunities – for example social trading?
ADS already offers clients a number of options for auto-trading, which allow them to follow trading signals generated by either one or a list of traders. They can evaluate their actual performance in a transparent and accurate way, benchmarking themselves against others in the market.
Trading communities are becoming very popular and the more traders interact with each other the more that they are aware of the services being provided. This makes them much more discerning and means that as a service provider ADS needs to offer the best possible support and products. I believe that social trading is a win-win for the industry. If traders work together and become successful they will trade more and introduce more people to forex trading. This is an area we are investing in. We already provide extremely high-quality proprietary research, which is provided free to all our clients and we are looking to be able to provide a way for clients to share signals and trading knowledge.
ADS has been quite vocal in its advocacy of the RMB as a future, major trading currency What is your vision for the RMB and why do you hold these views, given the controlled and restricted governance of the Chinese currency to date?
In late 2010 ADS Securities was saying that the RMB (CNH) would continue to strengthen against the USD and in 2014 we have seen new levels set and new volatility. The issues affecting the global economies have impacted all the main currencies from the dollar to the yen, which has left a gap for traders looking for a safe-haven currency. The much talked about slowdown in the Chinese economy is happening and there is a need for China to change from an export driven economy – which for many years has directed their control of the RMB – to an internal market strategy. To achieve this there needs to be a relaxing of currency controls and a liberalisation of investment opportunities. Through 2014 we will see a dramatic increase in the trading of the RMB and we want to be able to provide our clients with access to the currency.
Global financial regulation, is this is hindrance or a help, a risk or an opportunity for ADS and for the markets in which it operates?
ADS Securities’ has a long term view of the market so would rather work with strong regulators who have defined rules and guidance. In some markets regulation has become politically motivated, which can make it restrictive and difficult to manage as a business, but this is better than unregulated markets. Any broker, looking to be around for many years, wants to be sure if they invest in a market, that rules are in place which will maintain that market, and the business opportunity. If you invest in an unregulated market it is almost certain that at some stage this will be regulated and there will be a high probability that some or all of your investment will be lost. It is better to work with regulators rather than having to keep looking for new markets and loopholes.
Do you expect retail forex to continue to undergo consolidation and what impact would that have on the wider market?
The retail market has changed. Clients are more in control of their positions and are demanding a lot more from their FX company. They need to see added value and know they are trading with a company that genuinely wants to see them improve their P&L. If they believe that the company is happy to see them crash and burn they will move to a provider who will support them and offer the service they are looking for. This does mean that there will be further consolidation in the market. Brokerages will need to invest in clients, but they also need to invest in managing regulation and to expand their compliance teams. These operational costs will require further efficiency that can best be achieved through consolidation and increased size.
2014 is clearly going to be a big year for ADS and China and the future of the RMB has a big part to play. But Philippe Ghanem’s vision is much broader than that. The emerging clarity, if complexity, of regulation covering trading across a range of asset classes and jurisdictions was bound to figure large in the development of ADS, as at every other market provider. But the firm is demonstrating its willingness and agility in working with new regulatory conditions as they emerge and is investing substantially in the technology to accommodate whatever the new trading environment will look like. Some competitors will look enviously at ADS’ positioning and resources but it is clear that Philippe Ghanem is taking nothing for granted as he guides and monitors the emergence of the firm towards becoming a significant global player in the market.