Expands its global regulatory reach beyond UK and EU markets
31st March 2025 – Archax, the UK FCA regulated digital and traditional asset exchange, broker and custodian, today announced the acquisition of Globacap Private Markets Inc. (Globacap PMI), a US SEC and FINRA regulated broker-dealer and alternative trading system (ATS), to be renamed Archax Markets US. This acquisition will enable Archax to extend its distribution/reach into the US market, and follows its recently announced acquisition of Spanish broker King and Shaxon Capital Markets (Archax Markets) – which gives Archax a regulated presence in the EU, once change of control approval is complete.
Globacap PMI currently operates a regulated broker-dealer and alternative trading system (ATS) to provide primary and secondary securities transactions in US private markets. Through this acquisition, Archax will leverage these permissions and capabilities to offer its relevant core real-world asset (RWA) products and services in the US.
Archax provides issuance, custody, distribution and trading for assets in both traditional and digital form. It has introduced products across multiple asset classes, including tokenised money-market funds, corporate bonds, carbon credits and uranium on its platform. Archax will also be adding other traditional assets into the mix – starting with UK equities and gilts, and soon US instruments too.
“The Archax vision has always been to offer our RWA products and services globally”, explains Graham Rodford, CEO and co-founder of Archax. “The acquisition of Globacap PMI in the US builds on the strong partnership we already have with them in the UK, and is a part of that global strategy. In particular, we want to help support institutional market participants transition from traditional to digital assets and give them the regulated tools and services they need to do that. The US is an enormous and important global market – and with the recent change of government and new, clearer and more open regulated landscape, it is important for firms in our space to have a clear US strategy – and this transaction gives us just that.”
Archax is focused on digital asset products and services for professionals and institutions, and tokenises RWAs onto a number of DLTs/blockchains, including Algorand, Arbitrum, Ethereum, Etherlink, Hedera Hashgraph, Polygon, Solana, Stellar, XDC and XRPL.
About Globacap
Globacap is a leading capital markets technology firm that digitises and automates the world’s private capital markets.
It delivers a white-label SaaS solution that brings public markets-like efficiency to private markets. The software’s digital workflows enable financial institutions including securities exchanges, securities firms, private banks, and asset managers to accelerate their private market commercial activity while also driving down operating costs.
One platform. Next-generation technology. Powerful placement and liquidity management.
Archax is the UK’s first FCA-regulated digital asset exchange, custodian, and brokerage, designed for institutional investors. Archax provides a regulated environment for trading digital securities and other digital assets, creating a gateway between traditional finance and the digital economy.
With a focus on transparency, security and innovation, Archax is at the forefront of the digital transformation of financial markets.
Global foreign exchange trading, already the largest financial market in the world by trading volume, is on the rise. The New York Fed reported average daily FX volume of $1.19 trillion in October 2024, up 17 percent from the year-earlier period, and new tariffs imposed by the US are stoking volatility and providing a tailwind for trading activity.
Amid volume growth, the structure of the FX market continues to evolve, driven by factors such as a sharp increase in the number and types of trading venues, and more algorithmic execution.
Traders Magazine caught up with Tomo Tokuyama, head of Trading Technologies’ nearly two-year-old TT FX business unit, to learn more about the state of FX trading and how TT is expanding its capabilities in the market.
Tomo Tokuyama, Trading Technologies
Briefly discuss your career to date?
Prior to joining Trading Technologies, I spent more than a decade at First Quadrant, which is a large quant macro manager based in California. I was first head of FX trading and then I was the head of the entire trading group. Prior to First Quadrant I was at Goldman Sachs in Hong Kong and in Tokyo, in FX.
I joined TT to lead TT’s expansion into FX in July 2023. Keith Todd, the CEO and I had a mutual connection, and the relationship spawned from there when he was thinking about going into separate, multi asset classes, FX being one of them. So it all came together.
How is the FX market evolving?
I’ve been speaking at industry events for years now, and one of my main themes has been how the future will be electronified. Whether it’s algorithmic trading, whether it’s AI, or whether it’s machine learning, what has been rules-based is going to be more automated and driven by data and analytics.
But the market is not necessarily ready to get there quite yet. There are many reasons for that – A couple being lack of technology/innovation and willingness to change. In order for adoption to take place, the right technology needs to exist along with firms and traders who are willing and open to transforming their execution workflows – even if that means a trader’s role will significantly change. I’ve been around long enough to have seen the progression on the sell side – when e-trading in FX started, people were reluctant to move at first and they held on to voice trading for a while. But that changed over time as technology advanced, and buy-side firms adopted to electronfication. It’s inevitable and simply a matter of time before the role of the trader becomes similar to a pilot in the cockpit monitoring all of their automated executions across various asset classes on a single platform. I along with the team have to do our best to make sure that platform will be TT.
The historical strength of Trading Technologies has been in futures and options. How are you muscling into the FX market?
TT has a great advantage in terms of distribution. We have connectivity on the sell side and on the buy side that we have built over the last 30 plus years. And it’s a sticky distribution as new offerings are heavily scrutinized at most firms – they have to go through an arduous process to obtain approval. So the play for TT in FX is to target existing TT clients with FX as a value-add, as an opportunity for them to consolidate. If you go to any hedge fund today, they use a variety of different platforms across various asset classes. Hopefully, they’re using TT for futures, but for FX, they might be using multiple platforms. But we know they’re looking for consolidation in order to streamline their process through the life cycle of the trade, from execution all the way downstream
So we get a lot of traction from buy-side clients that want to consolidate their EMSs, which allows them to save on screen real estate, streamlines their post-trade workflow with a single drop copy for futures and options and FX, gives them a single FIX API for both futures and options as well as FX – the whole gamut. There’s the counter argument that by using one platform, your risk is consolidated to one platform. That is a legitimate argument, but as firms get better at managing that, net-net it makes sense for buy side firms to consolidate.
What we’re building at TT for FX is not just another FX offering. We’ll give you everything that you have from your existing FX platform, but also we open up your world to all of our futures trading tools. You can trade separate asset classes on one platform, using the same tools whether it be Autospreader to trade basis or ADL to create bespoke algos across asset classes. That’s the vision.
Our story is resonating – liquidity providers are coming to us to launch new OTC products on our platform. It’s all part of our value proposition of being a massive distribution hub. And we’re a technology provider, not a venue, so we’re not in conflict or competition with the LPs – we want to be partners and create an ecosystem that is mutually beneficial for all participants.
Is FX still in the early stages of realizing its longer-term vision at TT?
I’d say so. The idea has always been to bring ECN/venue liquidity onto the TT ecosystem. The first iteration was to get anonymous streaming liquidity. Now the push is for our full FX offering, which will include full amount liquidity with multiple LPs, forwards, swaps and NDFs. That’s coming soon, so keep an eye on us.
NYSE Texas is the First Securities Exchange to be incorporated in Texas
Trump Media & Technology Group Joins NYSE Texas
The New York Stock Exchange, part of Intercontinental Exchange, a leading global provider of technology and data, today announced that NYSE Texas is officially open for business, becoming the first securities exchange to operate in Texas, with Trump Media & Technology Group as the first new company to join the NYSE community through a listing on NYSE Texas.
“We are thrilled to open NYSE Texas to corporate issuers and to welcome Trump Media & Technology Group to our NYSE community through a NYSE Texas listing,” said Lynn Martin, President, NYSE Group. “This new offering, which we announced just last month, will allow companies to capitalize on the pro-business dynamics in Texas. We applaud Trump Media, Governor Abbott and the state of Texas on their commitment to supporting the innovation of U.S. capital markets.”
“We’re honored to become the initial listing for NYSE Texas, which is a great fit for TMTG as we diversify into financial services and other realms,” said TMTG CEO and Chairman Devin Nunes. “Texas provides a fantastic climate for business and entrepreneurship that aligns with TMTG’s mission. This listing, alongside our plans to reincorporate in Florida, shows we’re part of a growing movement to take our business to states that value free enterprise and personal freedom.”
The State of Texas is home to the largest number of companies listed on the NYSE, representing more than $3.7 trillion in aggregate market value and will soon be home to NYSE Texas’ new headquarters in Dallas. Building on the NYSE’s more than 230 years of experience as the world’s leading exchange operator, NYSE Texas now provides a listing exchange to companies attracted to Texas’ growing population, strong economy and business-friendly agenda.
Trump Media and Technology Group will continue its existing primary listing and be dually listed on NYSE Texas under the symbol “DJT”.
The Securities and Exchange Commission today voted to end its defense of the rules requiring disclosure of climate-related risks and greenhouse gas emissions.
SEC Acting Chairman Mark T. Uyeda said, “The goal of today’s Commission action and notification to the court is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules.”
The rules, adopted by the Commission on March 6, 2024, create a detailed and extensive special disclosure regime about climate risks for issuing and reporting companies.
States and private parties have challenged the rules. The litigation was consolidated in the Eighth Circuit (Iowa v. SEC, No. 24-1522 (8th Cir.)), and the Commission previously stayed effectiveness of the rules pending completion of that litigation. Briefing in the cases was completed before the change in Administrations.
Following today’s Commission vote, SEC staff sent a letter to the court stating that the Commission withdraws its defense of the rules and that Commission counsel are no longer authorized to advance the arguments in the brief the Commission had filed. The letter states that the Commission yields any oral argument time back to the court.
By Cia Fatemi, Global Head of Sales, Market Data Services, Transaction Network Services
Market data is the lifeblood of trading firms, powering everything from algorithmic strategies to risk management and regulatory compliance. However, it may often be inefficiently managed due to high capital expenditures, redundant feeds, and fragmented systems. Traditional market data infrastructure requires a substantial upfront investment, ongoing maintenance, and frequent upgrades, creating both financial and operational challenges.
Market Data as a Service (MDaaS) is emerging as a cost-effective alternative. By leveraging managed services and economies of scale, firms have the potential to achieve greater flexibility, streamline operations, and ensure compliance – without reducing staff or compromising execution speed.
The High Cost of Traditional Market Data Management
Historically, trading firms have relied on in-house infrastructure to manage market data, requiring significant investment in hardware, software, and connectivity solutions. The complexity increases further with the costs of licensing data from multiple exchanges and ensuring compliance with each one.
For active trading firms, this often results in multimillion-dollar capital expenditures to maintain and upgrade systems. The issue is compounded by data fragmentation, where different desks or departments subscribe to overlapping feeds, resulting in redundant costs and inefficiencies. Without a centralized approach to market data, firms may find themselves navigating a maze of duplicative subscriptions and escalating expenses.
How MDaaS Delivers Immediate and Long-Term Savings
By outsourcing market data management to a managed service provider, trading firms can convert substantial capital expenditures into predictable operational costs. Instead of large upfront investments in infrastructure, firms pay for market data as an ongoing service, allowing them to scale dynamically in response to trading activity and market conditions.
With MDaaS, firms benefit from:
Cost Efficiency: Centralized management reduces redundant data feeds and optimizes usage, leading to immediate cost savings.
Scalability: Firms can expand or reduce market data consumption based on real-time needs, without being locked into inflexible contracts or outdated infrastructure.
Compliance and Risk Management: A managed service provider works to help firms remain compliant with market data licensing agreements, which can reduce regulatory risk and penalties.
The Role of Managed Services in Market Data Optimization
Managed services maximize the value of MDaaS. Rather than dedicating internal resources to maintaining market data infrastructure, firms can partner with specialized providers that offer real-time monitoring, compliance oversight, and technical support.
One key advantage of this approach is the ability to dynamically adjust market data consumption based on usage analytics. Many firms subscribe to data sources that are rarely or inconsistently used. With advanced monitoring systems, trading firms can identify underutilized feeds and eliminate unnecessary costs.
By shifting to an MDaaS model supported by managed services, firms can reallocate internal resources from infrastructure maintenance to higher-value initiatives, such as refining trading algorithms and risk modeling.
Addressing Concerns: Cost Savings Without Performance Trade-Offs
Cost-cutting in trading is often associated with performance trade-offs, but MDaaS can allow firms to achieve significant savings while maintaining ultra-low latency and uninterrupted market access.
With the continued focus on colocation, direct market access (DMA), and smart order routing in low-latency trading, firms must ensure their market data solutions are not only cost-effective but also optimized for performance. A well-implemented MDaaS solution delivers only the necessary data in real time, reducing unnecessary bandwidth consumption while maintaining execution speed and data integrity.
As the trading industry evolves, firms relying on legacy market data infrastructure risk falling behind. With rising regulatory demands and intensifying competition, optimizing costs without compromising performance is critical. For C-level executives and trading desk managers, MDaaS is more than just a cost-saving measure – it’s a strategic advantage in an increasingly fast-paced market.
Bob Currie discusses some of the key points discussed in the WFE’s paper that calls for a refresh of public policy on derivatives to support their use in regulated, lit environments.
By providing an accurate mechanism for pricing specific types of risk – the price of an equity, for example, or a barrel of oil – derivatives give users “more power to manage risk than any other financial instruments.”
So says the World Federation of Exchanges(WFE) in a recent report, Shining a Light on Derivatives (WFE, March 2025) which highlights the importance of exchange-traded and centrally-cleared derivatives in enabling market participants to manage the risks that confront them in financial markets.
Listed markets represent the “safe core” of derivatives, just as they do for equities and other financial instruments, claims the report. “It is vital for the health not just of the listed markets, but for finance more generally, that we ensure that they continue to do so.”
However, for retail investors, for public bodies, for small companies and some other categories of market participant, their access to derivatives trading is often more limited than it is for securities and this constrains the risk management benefits available through this channel.
Moreover, derivatives exchanges – as providers of the price formation “on which the whole market relies” – may find that more lightly regulated competitors are applying this price information to conduct their own trades outside of the public gaze. This result, suggests the WFE, is a fragmented marketplace working to the advantage of a few powerful intermediaries, but sometimes failing to offer the same level of benefit to their customers.
As its foundation, the report suggests a need to revisit the balance between exchange-traded and over-the-counter derivatives (OTC) and, more generally, between lit and dark trading markets.
Exchange-listed derivatives, in offering standardised contracts, deliver “transactional transparency” and the benefits of liquidity and market integrity. “This”, says the report, “is why the role of exchanges – and clearing houses, to neutralise the related counterparty risk – should be nurtured and favoured in public policy.”
The authors note that OTC derivatives can be useful when they solve a specific problem for a specific user. This, in turn, may result in a “symbiosis” between the listed and OTC derivatives markets — for example, a dealer in the commodities markets might use a listed oil derivative as a proxy to hedge a forward-dated transaction in a different, but not heavily traded, grade of oil.
However, not all OTC derivatives transactions are tailored in any meaningful sense, the report argues. OTC contracts may be traded that offer the same exposure – in terms of size and maturity – to those available on exchange, “but without any of the public-good obligations associated with lit public markets”.
As an example, it suggests that swaps started as a bespoke instrument. However, relatively quickly they were being traded with maturity dates that align with interest-rate futures, but without the price discovery advantages that exist in listed derivatives markets.
For the WFE, derivatives are sometimes the subject of “irrational hostility” from those who fail to take into account key differences with other financial products. This is particularly the case for cash-settled derivatives that make up a large share of the market.
One problem, the report indicates, is that some critics do not have an accurate picture of the true size of the derivatives market – and, by implication, they may overstate the systemic risks associated with this market segment.
Many participants, especially dealer intermediaries, employ a range of offsetting contracts, which must be netted down in the event that a party falls bankrupt. In terms of notional amount, this activity may aggregate to a few hundred trillion dollars. “In reality, the amount that would change hands, if all derivatives were closed out, would be about one hundredth of that, since it would be the mark-to-market value of the contracts, netted down to reflect economic offsets,” says the report.
Moreover, those mark-to-market amounts are typically well collateralised. When centrally-cleared, central counterparties (CCPs) play an essential role in mitigating counterparty risk, requiring posting of initial and variation margin, ensuring that collateral quality aligns with the specified eligibility criteria, and backing this with additional resources as part of the CCP’s risk management framework.
“Let us remember that the G20 in 2009 chose not to restrict derivatives but to ensure they were traded in the best possible environment,” says the report.
Dynasty Financial Partners, a leading advocate of the independent wealth management movement, is excited to announce a strategic collaboration with Goldman Sachs through which Goldman Sachs Custody Solutions will become one of the preferred custodians to Dynasty’s Independent RIA Network, underscoring Dynasty’s commitment to delivering comprehensive services through elite collaborations.
According to Shirl Penney, Founder & CEO of Dynasty Financial Partners, “Goldman Sachs is one of the premier global brands in financial services. By integrating Goldman Sachs’ custodial services, asset management, lending, and capital markets expertise into Dynasty’s full suite offering for RIAs, we are significantly enhancing the breadth and quality of services available to our network of Independent Advisors. This collaboration represents a significant milestone in our ongoing mission to provide unparalleled support and resources, ensuring that our Network Partners have access to the high-quality tools, technology, products, and expertise in the industry.”
Key Highlights of the collaboration include:
Dynasty Financial Partners and Goldman Sachs Custody Solutions have developed technology that integrates with Dynasty’s Turnkey Asset Management Program (TAMP), to support a smooth and efficient experience for Dynasty RIA Network Partners.
The combination of Dynasty Financial Partners’ extensive RIA expertise and strong industry reputation with Goldman Sachs’ institutional-grade resources and distinguished standing, positions both parties to enhance and expand their presence within the RIA space.
Goldman Sachs’ asset management solutions provide significant value to the Dynasty network, enhancing the services available to our advisors and their clients.
Dynasty and Goldman Sachs Custody Solutions will have dedicated transitions teams collaborating to provide custody, TAMP, trading services, and billing solutions to RIAs, in an effort to deliver the highest standards of service and efficiency.
The broader collaboration enhances Dynasty’s asset management, investment banking, and lending services, delivering comprehensive support and greater value to our advisors.
Advisors and their clients highly value Goldman Sachs’ brand and its extensive HNW solutions, enhancing the appeal and trust in Dynasty’s and Goldman Sachs’ combined offerings.
“Goldman Sachs is thrilled to collaborate with Dynasty Financial Partners, one of the pioneers in the RIA movement,” said Adam Siegler, Partner and Head of OneGS RIA Strategy and Retail Client Segment at Goldman Sachs. “They have demonstrated their focus on providing sophisticated services to the leading independent advisory firms in the industry. This relationship is a testament to our dedication in elevating the independent advisor experience.”
“Dynasty is continuing its ongoing mission to source and partner with proven providers from across the industry allowing our advisors to build better business and better care for their clients,” said Dynasty Chief Operating Officer, Marc Hineman. “In delivering the Triangulation of Advice ™ model, Dynasty didn’t set out to just level the playing field but rather to tilt it in favor of those advisors that are Powered by Dynasty.”
Dynasty’s network consists mostly of clients who own and operate independent registered investment advisories (RIAs) that leverage Dynasty’s integrated technology, services, robust turnkey asset management program (TAMP), digital lead generation services, capital solutions, and investment bank. As a leader in the industry, the integrated RIA platform model provides synthetic scale and allows Dynasty-powered RIAs to be Independent But Not Alone™. Currently, Dynasty has 57 Network Partner firms representing over 500 advisors and over $105 billion in platform assets.
FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.
The premier event on STANY’s calendar will be held at the New York Stock Exchange in lower Manhattan, with a day of panel discussions and networking sessions followed by an evening cocktail reception.
What better way to gear up for this year’s STANY event, then to look back at a past event?
Specifically, we located some photos from a 2010 STANY event. To be sure, a decade and a half isn’t that long, and we see some familiar faces who are still in the industry and may well turn up at this year’s STANY. At the same time, the photos do show their age, perhaps most notably by the prevalence of men’s ties.
James Toes, Bank of America Merrill Lynch, New York; Jennifer Setzenfand, Federated Investors, Pittsburgh; James Duncan, Canaccord Capital, Toronto; Marty Rogan, Pershing, Jersey City.Michael Cooleen, Sungard, Jersey City; Bill Schwanewede, NYSE Euronext, New York; Peter Stark, Raymond James, New York; Sachin Barot, FlexTrade, Great Neck; Steve Hughes, Exegy, New York. Tony Sanfilippo, Hudson Securities, Ben Lim, Knight Capital Group, both Jersey CityEd O’Malley, PDQ, Chicago; Jim Gregory, TMX Group; Sean Malloy, Penson Financial, both New York.Angela D’Angelo, Benchmark, New York; Brenda Blackard, Davenport & Co.; Jane LaGennusa, StockCross, Jersey City; Lou Matrone, JonesTrading, Dallas.Cromwell Coulson, Pink OTC Markets, New York; David Grove, E*Trade, ChicagoDavid Allyn, Knight Capital Group, Jersey City; Steve Miele, Level ATS, BostonDanielle Dayan, Citadel, Chicago; Francis Corcoran, Scotia Capital New York.
Click here to view the full photo gallery, which was published on Traders Magazine on May 2, 2010.
Securities Industry Employment Passes Previous 2000 Peak, Average Bonus Hits $244,700
The average bonus paid to employees in New York City’s securities industry for 2024 reached $244,700, up 31.5% from last year, according to New York State Comptroller Thomas P. DiNapoli’s annual estimate. The bonus pool for the city’s securities employees reached a record $47.5 billion, its first major increase since the COVID-19 pandemic highs. Wall Street’s profits rose 90% in 2024.
“The record high bonus pool reflects Wall Street’s very strong performance in 2024,” DiNapoli said. “This financial market strength is good news for New York’s economy and our fiscal position, which relies on the tax revenue it generates. However, increasing uncertainty in the economy amid significant federal policy changes may dampen the outlook for parts of the securities industry in 2025.”
The total estimated 2024 bonus pool is 34% higher than last year’s $35.4 billion and is the largest amount on record dating back to 1987. Robust economic growth led to increased trading, account supervision, underwriting, and selling revenues, driving strong profits and helping generate the first significant bump in the average bonus estimate since 2021.
Securities employment in 2024 reached its highest annual level in at least three decades with 201,500 employees, up from 198,400 the year prior and exceeding the previous peak seen in 2000. The city remains the nation’s financial capital even as the city’s share of securities industry jobs has declined as companies have expanded nationally in recent years. In 2024, the city’s share of industry jobs nationally was 18%, down from about 33% in 1990, but still more than any other state. DiNapoli estimates 1 in 11 jobs in the city is either directly or indirectly associated with the securities industry.
Wall Street accounted for 19% of the state’s tax collections in State Fiscal Year (SFY) 2023-24 and 7% of city tax revenue in City Fiscal Year (FY) 2024. DiNapoli estimates the 2024 bonuses will generate $600 million more in state income tax revenue and $275 million more for the city when compared to the previous year.
The Governor’s proposed budget assumed bonuses in the state’s broader finance and insurance sector would increase by 16.4% in SFY 2024-25, while the city’s FY 2025 financial plan assumed an increase of 16.5% in the city’s securities industry bonuses. Based on DiNapoli’s estimate, tax revenue from the securities industry bonuses should meet or exceed expectations for the current fiscal year.
In 2023, Wall Street was responsible for 17.7% of all economic activity in the city (most recent data available). Financial services firms continue to have one of the highest return-to-office rates among all industry sectors in New York City. The Partnership for New York’s May 2024 survey found that office attendance rates for the financial services sector were at 60% compared to 56% for the private sector overall.
Financial services firms are also responsible for a greater share of new leasing activity in the city since the pandemic and have helped drive the development of new property. For instance, JP Morgan Chase is close to completing its new 60-story headquarters building in Midtown and purchased another nearby building (250 Park Ave) to add to its portfolio. Twenty-one other major financial firms are also active in the market, such as BlackRock, which is increasing its footprint in Hudson Yards to over a million square feet.
Methodology DiNapoli’s office releases an annual estimate of bonuses paid during the traditional December through March bonus season to securities industry employees who work in New York City. Bonuses paid by firms to their employees located outside of New York City, whether in domestic or international locations, are not included. The Comptroller’s 2024 estimate is based on personal income tax withholding trends and includes cash bonuses paid for work performed in 2024 and bonuses deferred from prior years that have been cashed in. The estimate does not include stock options or other forms of deferred compensation for which taxes have not been withheld.
Grupo Financiero Banorte, commonly known as Banorte, is the second largest financial group in Mexico and one of the largest institutional brokers on Mexico’s two stock exchanges, BMV and BIVA.
Traders Magazine met with Bruno Alberto Grebe Martinez, Executive Director, Capital Markets at Banorte, and Jorge Ignacio Lagunas Cortes, Director of Capital Markets Promotion at Banorte, at their Mexico City office on March 6. The discussion covered Banorte’s equity trading capabilities, the equity trading landscape in Mexico, and the evolution of the Mexican equity market.
(This interview has been edited for length and clarity.)
Briefly describe your roles and responsibilities at Banorte.
BRUNO GREBE:
I manage the equity desk, which is composed of three main businesses.
Bruno Grebe, Banorte
First we handle the retail orders from our private banking group, which includes execution and arbitrage. Second, we have a proprietary position that I also manage which consists of a prop trader who sits outside our desk.
And we also have institutional sales which consists of two businesses – we take care of clients in the US and abroad, and we take care of our local institutional clients, mainly pension funds or afores, mutual funds, and insurance companies.
JORGE LAGUNAS:
Pension funds are about 90% of the institutional market here in Mexico. In terms of size, mutual funds and afores are about 40% of the GDP of Mexico. So it is a huge sector.
BRUNO GREBE:
Jorge is in charge of institutional sales in Mexico, which is about 70% local and 30% international.
The mix has changed over the years. It used to be around 80% international, but commissions from the international institutions get smaller every time, so we’re trying to do more to take care of the local guys. We have the advantage of being a big bank, so people want to trade with us in order to settle and manage the risks that matter to the institutions.
What markets do you trade?
BRUNO GREBE:
We trade equities in Mexico and the US mostly.
It’s about 60% international and 40% national. For international it’s about 90% US and 10% in other countries.
JORGE LAGUNAS:
Over the past five or six years the US market has performed better than other markets, so we’ve seen the retail base on the private bank side trade more in the US.
Jorge Lagunas, Banorte
BRUNO GREBE:
There’s a parallel market in Mexico, which is comprised of US companies. We bring in stocks from the US and convert them into pesos, and then you can buy, for example, Apple stock in Mexican pesos. This is done on the International Quotation System, or SIC (Sistema Internacional de Cotizaciones). The exchange has a clearing member in the US, so when a client trades Apple or any other US name here in Mexico, we settle the trade with the custody from the Mexican exchange to New York.
We can list anything that is listed in the US, except for Bitcoin or cannabis.
There are more than 1,000 US names listed here. We also trade ETFs and UCITs from London. We can trade all over the world.
What are your primary challenges as a broker, in terms of getting best execution for your clients’ trades?
BRUNO GREBE:
We have two exchanges in Mexico – the Bolsa Mexicana de Valores, or BMV, and Bolsa Institucional de Valores, or BIVA. In order to comply with the regulations in Mexico, we have to trade on both exchanges, and that can take out some opportunity in the secondary market, because I don’t think the Mexican market is big enough for two exchanges. If we send 10,000 shares to an exchange, we might get executed only 3,000, and we have to handle the rest in order to get the best execution for clients.
A second challenge is that Mexico does not have many names that are interesting to Mexican investors right now and there aren’t many IPOs. This is why we’re focusing on bringing them different opportunities, like US- listed names that have a lot of volatility, or investments in Canada or Europe.
JORGE LAGUNAS:
In terms of trade execution, the local institutions are growing a lot in terms of assets, but they need to do more electronic trading, and we as a broker need to help and support them in this area. With the most of the afores and funds it’s still about taking a call and doing a trade manually which means giving the trade order to the desk. So this is a challenge but also a great opportunity to do more electronic trading, which reduces cost and time.
How much of your trading is manual / high touch, versus electronic / low touch?
BRUNO GREBE:
Retail is basically high touch. US customers are pretty much all electronic, low touch. We have direct market access (DMA) connected through us, and we have another local client that trades very low touch.
But as we mentioned, institutions in Mexico give you the order by phone. We are trying to move this to electronic trading through some different channels that we have, like BlackRock’s Aladdin order management system (OMS).
JORGE LAGUNAS:
Today our mix is maybe 70% manual trading and 30% electronic. But it’s important to note that even for electronic trades, clients in Mexico need to call to place the order, because the regulators require this.
What do you use for trading technology and how do you work to keep improving your systems?
BRUNO GREBE:
For retail we have used a system called TAS for many years. But we are moving to Lumina Order Management, which is what we use on our desk and is the provider of our OMS. We’re trying to have all systems through one provider, which is why we’re moving retail to our platform.
For trading algorithms we use FIS, Fidessa and Tradeware.
JORGE LAGUNAS:
For connectivity we have NYFIX. We have a dedicated channel to Houston, and then to New York, where our low touch clients get connected.
What is the importance of relationships and technology and how do they work together?
BRUNO GREBE:
Technology is one of the main issues now, because even if you have a very good relationship with the client, if you don’t have the technology they will trade with somebody else. Banorte is well-positioned as a broker, because we can provide all the different trading platforms the client needs, and we have algorithms, FIX connections, and direct access. All of our systems are interconnected and work well, and we’re very fast on low-touch orders.
JORGE LAGUNAS:
Technology means everything for top brokerage houses. The competitive environment here in Mexico is very hard – there are 32 brokerage houses, 10 Afores, and 30 mutual funds. That’s 40 institutional clients for 30 brokerage houses. So you need the technology and you also have to provide value in terms of research, news, ideas, and more every day.
How are Mexican markets evolving, and what are the main differences between trading in Mexico and trading in the US?
BRUNO GREBE:
The main difference is liquidity. We have little depth in the market. So if a venture fund wants to buy $100 million in Mexican stocks, that probably will move the stock market 1% or 1.5% higher. This lack of liquidity is why more clients are trading abroad.
For evolution, in 1998 the stock exchange changed to electronic, and since then everything has been improving in terms of technology and speed. But the main issue is liquidity and a lack of new issues.
JORGE LAGUNAS:
There might be one IPO per year in Mexico. If the Afores are growing their assets by 10% per year, those funds have to be invested somewhere, so it goes abroad.
Another challenge is that the stock float in Mexico is very low. The average is around 15% or 20%, where it’s 95% or more in the US.
What does the future hold, both for Mexican markets and for Banorte?
BRUNO GREBE:
As we mentioned we’re shifting more of our focus to local institutions, because for us it’s better to take care of these guys locally than the US guys that trade for very little. We’re trying to broaden the list of Mexican clients, while obviously not forgetting about the US guys, because they are important as well.
JORGE LAGUNAS:
In Mexico, there is a very low number of clients with brokerage accounts relative to the overall population. Investing in stocks or ETFs for long-term savings isn’t really part of the culture. But it’s a great opportunity for the industry. Other countries in Latin America have more brokerage accounts than Mexico, even with lower populations. So it’s a good challenge and also an opportunity for broker associations here in Mexico to promote the market for investors. It’s an area where we need to evolve.
BRUNO GREBE:
The authorities have changed the rules and lowered the requirements for companies to list in Mexico, which is good. But there’s still little interest from companies to get listed, because they would have to report quarterly results, and if the float is low the stock still won’t trade much.
Any final thoughts?
JORGE LAGUNAS:
The manufacturing and technology industries in Mexico are growing fast. I think the financial system has to go in the same direction. It’s a great opportunity for investors, for brokerage houses, and for banks, to move the industry forward.
