Multi asset Prime Brokerage Invast Global has merged many decades of experience in the Japanese domestic online broking industry with some of the sharpest institutional brokerage executives in the industry, to build a multi asset liquidity offering for online brokers which has won awards across the globe – and a growing legion of loyal clients. Investments in technology and a high-powered quant team over the past few years have seen the firm rapidly grow their global client base and asset class coverage. Feedback from existing clients has given rise to an admirable reputation within the industry.
Steered by CEO, Gavin White, Invast Global projects an egalitarian and professional culture with a focus on integrity. As the firm enters its 8th year of strong growth, an evolution has become apparent that portrays a firm increasingly sharpening its focus and expertise on the complex multi-asset liquidity needs of global online brokerages. e-Forex spoke to Mr White about the evolution of Invast Global and exciting developments within the group’s listed parent entity, Invast Securities, that auger well not only for the Australian subsidiary, but the structure and health of the liquidity provision industry itself.
So, Gavin, maybe we should get the obvious question out of the way first. How has Invast Global coped with the pressures that surfaced in 2020, notably the COVID-19 crisis?
I’m very proud of how our team of 45 staff transformed from office-based to 100% work-from-home within a few days. We were fortunate that we had run mock trials of work-from-home for a few years as part of our Business Continuity Planning. Even so, it was a big call, because as everyone know, markets were extremely volatile in the first few months of the crisis. I believe the first week of working from home coincided with our biggest turnover day ever, across all asset classes. The team and technology were faultless. We have to thank our trading infrastructure partners OneZero, Flextrade and PrimeXm and our data partners, NASDAQ/CME/CBOE/REFINITIV who all performed flawlessly, as we have come to expect. One of our core strengths is our strong relationship and long term investment alongside Amazon Web Services. Most of our workflow is conducted and processed within a purpose-built secure cloud environment on AWS infrastructure. That made all the difference. We didn’t need to be in the office at all. Having said that, Tom Jarman and Callan Strickleton, who lead our IT/Infra team did a superhuman job making sure everything went smoothly.
Our Quantitative Structuring and Pricing (QSP) team had a few nervous eyes cast their way at the onset of the chaotic trading that led to negative prices on the last day of the expiring May Oil futures contract. The team had just released their latest product, a proprietarily-priced Cash Oil contract tied to the futures price. There was huge interest from our brokerage clients immediately and as soon as pricing was switched live, retail traders began to flood the product. Fortunately, the team has decades of experience in product structuring and structured the design with negative futures prices considered a real possibility. Simply put, the price dynamically adjusts it’s reference contract to the most liquid futures contract daily, avoiding the foreseeable chaos that can be unleashed when an expiring contract dislocates and retail clients are exposed to it. Our team negotiated the episode of negative pricing with the confidence that comes from knowledge and experience, without changing the methodology and without experiencing pricing outages. We continue pricing today with the same methodology, to the biggest retail brokers across the world. Our clients appreciated the stability and sophistication of our solution. It measured up well against some other solutions implemented in the industry at the time. The QSP team also showed their quality when the Gold market dislocated earlier in the year. Massively widened spreads from our bank and non-bank liquidity providers saw our team step up our programme of enhancing our aggregated liquidity with our own unique liquidity. Everything the team had been developing for the past 2 years was put to the test. These successes have led to Invast, at a group level, committing to a long term plan of excelling at unique liquidity provision, liquidity construction and execution for online brokers. In fact, we have restructured the company at group level to support this.
Invast Global has an interesting pedigree when it comes to online trading. The Japanese online trading industry has long been the dominant force globally, especially when it comes to FX trading. Your parent company, Invast Securities has been in the Japanese brokerage industry for 60 years and has been a leader in online trading for decades. I imagine there has been a lot of cross-pollination of expertise between the Japanese online trading experts and the wholesale broking/investment banking team in Sydney?
Yes – we have been able to achieve some amazing synergies. Invast Global has been able to benefit from the remarkable retail online trading expertise within our Tokyo-based team. Masato Kawakami and Seiki Ito have a great team and an incredible depth of experience in dealing and price making to huge retail client bases.
Hairej Younes heads up a truly impressive IT Dev and Data Science team based in Tokyo but comprising a diverse set of talented individuals from around the world. Our Quantitative Structuring and Pricing team in Sydney are the tip of the iceberg with regard to the resources and expertise we bring to the table. Staff swaps and regular secondments across the teams has engendered a truly unique culture of collaboration and innovation. We just have to get them all to stop playing XBOX and Playstation against each other!
The QSP team sounds interesting. Tell us about the people in that team. How did you find them and what do they do?
To be honest, I’m not sure where to begin in describing that team. Esteban Mora, who leads the team is an enigma wrapped within a riddle. I have no idea what genius idea he is going to come up with next. He is undoubtedly the coolest guy in our team globally and he has built an awesome culture among his staff. Three of the team have the connection of having studied Aeronautical Engineering (Space) at Sydney University. Yes, rocket scientists! One is a gifted Chemical Engineer who won the University Medal at UNSW. Another is a specialist Financial Mathematics and Data Science modeler. We also have a handful of interns in that team. The interns are honestly the absolute cream of the crop from Australian Universities. Only one person in the whole team has what I would call an acceptable haircut… but, we let them live life their way! The only thing that keeps me up at night is the guilt I feel for tempting such talented people into a career in Finance. They could possibly be better employed in pursuit of more socially-minded careers.
The internship programme you just mentioned is interesting. I understand it is in honour of the patriarch of Invast Group, Mr Koichi Kawaji.
Yes. Mr Koichi Kawaji, or “Chairman Kawaji” as he is affectionately known, is the heart and soul of Invast Group. His son, Takeshi Kawaji, is the driving force and the vision. His values underpin our culture and corporate strategy.
Chairman Kawaji and Takeshi Kawaji have been long term and unwavering supporters of what the team at Invast Global is striving to achieve. We decided to honour that by setting up the Koichi Kawaji Elite Internship Programme. It is financially a very generous programme, with assistance in payment of tuition fees, travel and flexibility designed to attract the very best all-round intellect and help fast track their careers. It has become unbelievably competitive.
Over the past 5 years, this programme has uncovered remarkable talent who have joined us permanently upon graduation. It has seen our team filled with intellectual firepower that is the envy of our peers. It is one of the secrets as to how we have been able to compete so successfully, not just in the Prime-of-Prime space, but directly with the big Tier 1 Prime brokers and liquidity providers. It is also one of the reasons we have been recognized with a number of industry awards.
Invast Global has certainly gained an enviable reputation in the industry and it appears to be the case fairly unanimously across retail brokers as well as the institutional side, amongst the banks and LPs. The industry-voted awards show that, but so does the general market “chit-chat” associated with Invast Global.
Thank you. The awards are great and we certainly stop to allow ourselves to acknowledge the support. But we don’t dwell on the awards. There is, of course, still much more to do.
The general positive reputation our firm has built is far more rewarding. We care a lot about our reputation amongst our clients and potential clients. We are a firm that wants to be easy to deal with. We want to be professional, sophisticated and reliable. But we also want to be empathetic, supportive and fun to deal with, not just robots. The genuine depth of relationships our Prime Services and Client Coverage teams have with their clients is impressive to see.
The positive image we have amongst the investment bank community and the non-bank LPs is a credit to our liquidity specialists, headed by Jamie Scott. Jamie’s team is professional and sophisticated and the banks and non-bank teams appreciate the intellectual and systems capabilities we have. It makes it much easier for us to work with the LP’s to curate specific streams to suit our client’s flow.
So tell us more about the restructure of Invast group that you mentioned before. What has been done and what was the motivation behind the changes?
We have been preparing for this change on the Invast Securities Board for the past 2 years. Invast Securities is the JASDAQ listed parent company of the group. Over the past 7 years, Invast Global has grown to be a strong contributor to the performance of the listed entity. The Japan-based business of the listed entity is mainly focused on serving their Japanese retail client base. The business has a leadership position in Japan in the area of unique trading platforms. The product development team and Data Science team in Japan have launched numerous, highly popular automated trading platforms such as, ST24, TriAutoFX and TriAutoETF. It has been our strategic plan for a while to more formally separate the business lines in order to focus our expertise and scale up our businesses, especially the Invast Global liquidity and prime services businesses.
In order to achieve this we have essentially delisted Invast Securities Co. whilst founding and listing a new holdings company, INV Inc. The founding Board of INV Inc now presides over very distinct business lines; the Japanese retail focused Invast Securities, and Invast Global, the institutional prime broker and liquidity provider, which I run with James Alexander, Nabil Rahman and Peter Bickerton.
These structural changes allow the Japan-based Data Science and Platform Development team to collaborate more deeply with the Financial Structuring, Quantitative Analysis and Execution skills within the Invast Global team. This freedom, which has been engendered amongst the teams for years, has already thrown up some industry leading financial instruments and services. The changes to the group structure crystallise this philosophy and corporate strategy.
It does seem like we are witnessing the evolution of a new type of player in the Prime of Prime and liquidity space with the emergence and success of the Invast Global model. You have been excelling with the traditional PoP model for many years, meanwhile you have been investing in staff and technology to allow you to more fully step into unique liquidity provision, product creation, b-book management and broker-focused account management tools.
Yes, not to mention developing and launching a full global suite of single stock CFDs for plug and play to MT5 brokers. It has been a big few years.
Tell us more about some of the products and services you intend to release and some of the other things we can look forward to given the corporate restructure, subsequent founding of INV Inc and the strong commitment within the group to the Invast Global business.
Our clients will have already seen the difference, but there is a 3 year plan of further enhancements forming our strategic vision.
We have been adding unique liquidity to our aggregated streams for a while now. It has resulted in remarkable improvements in top of book spreads and much better depth right through the streams. We are much more nuanced in our ability to create customized feeds and pools for our clients. Synthetic creation of new instruments is definitely a focus. We have released a range of new unique instruments to our broker clients over the past 12 months.
They have been very popular with the end retail clients. Examples include our cash Oil products, our cash VIX index and USD Index products. We have been continually adding to our suite of cash index and commodity products. Each time we launch a new product the flow begins immediately. Retail traders love to explore new instruments, especially when the pricing methodology is clear and transparent and the product is engineered with sustainability, meaning methodologies don’t need to change and retail clients develop a loyalty to the product.
With regard to the restructure of the group under INV Inc. the change allows Invast Global to scale up globally and take advantage of the opportunities we see opening up. Invast Global has recently signed two major new Prime Broking relationships. Credit Suisse has taken up the role as lead prime broker for Equities and Futures, supported by our existing prime relationships with Deutsche Bank. JP Morgan has joined our ranks of FX prime Broker relationships, joining Barclays Bank and Deutsche Bank. JP Morgan has also been appointed as client funds Custodian and transactional banker for Invast Global, replacing National Australia Bank.
All of which places Invast Global in a great position as the world emerges from the effects of COVID in 2021. We have advanced plans in place to open an office in Cyprus in early 2021. This office will comprise numerous roles including Prime Services executives, Client Coverage, QSP, R&D etc. The office in Cyprus will have a high-tech client Coverage command centre linked to our AWS cloud environment, just like the Sydney office, and the two offices will share the 24 hour duties 50:50.
In line with all of the developments we have talked about, there are plans in place to rebrand Invast Global in early 2021.Someone has even floated a crazy idea about relocating our team to an ultra modern, purpose-built command centre office within a renovated ex-military submarine base and torpedo factory in the middle of Sydney Harbour. Crazy. Stay tuned though.