FCA regulated IS Prime Limited (“IS Prime”) is one of the leading Prime of Primes globally, renowned for its liquidity, sophisticated proprietary technology and outstanding risk management capabilities. The London-headquartered firm is unique in that it is the only Prime of Prime with a systematic hedge fund manager as a major shareholder. Being part owned by ISAM, a $8.4BN FCA regulated hedge fund manager, has significant advantages in terms of its exceptional quantitative analytics and trading technology, market relationships and strong governance. This set IS Prime apart from its competitors from the outset when the firm launched in 2014.
As the business evolved, IS Prime became part of a wider group structure, the ISAM Capital Markets Group, which also includes IS Prime Hong Kong and IS Risk Analytics (“ISRA”). Here, we talk to leaders within these businesses to find out about the advantages of this group structure and the benefits to clients.
A Multi-Faceted Offering
Jonathan Brewer, Managing Partner of IS Prime and Commercial Director of ISAM Capital Markets says, “Having a group structure gives us the flexibility and agility to connect to, contract with, and work alongside clients in whatever way is most suitable to each and every relationship.
“We’re not a ‘one size fits all model’ and we understand that our clients all have differing requirements. Having a number of entities offering different services and regulatory solutions across jurisdictions enables us to have a multi-faceted offering, to fit our solutions to our clients and not the other way around. It is this flexible approach and set up that has enabled us to work with many of the largest brokers across the globe. Being part owned by ISAM provides additional reassurance to clients that we provide operational excellence across the Group.
“With IS Prime in the UK, ISRA in the US, and IS Prime Hong Kong we have local support and expertise that can be deployed as and when required. Our global coverage team uses shared systems and can support clients on a ‘follow the sun’ basis. We ensure that we always have the right expertise available, irrespective of which time zone our clients are based.
“With specialist risk consultancy, ISRA in our Group, we believe that we are the only group in our sector that properly straddles both the Prime of Prime and the Risk Management space. This is a key differentiator for us.”
An Outstanding Risk Management Offering
Jeff Wilkins, Managing Director, IS Risk Analytics explains, “ISRA is the risk consultancy and technology arm within the ISAM Capital Markets Group. We have oversight of around $3 trillion in monthly notional trading volume. This data enables us to spot trends, both regionally and globally, and to provide clients with unparalleled insight and risk management solutions.
“At ISRA, we work closely with IS Prime for liquidity and IS Prime Hong Kong for Index Swaps in order to provide a value-added service. Our clients come in all shapes and sizes. Some brokers lean on ISRA for everything, including risk advisory, hosting, bridging and connectivity solutions, and some brokers pick and choose what they need. Just like IS Prime, there is no ‘one size fits all model’ and we work with every broker to make sure they are efficient in all aspects of their business.
“Within the ISAM Capital Markets Group, each individual business has the opportunity to flourish on its own but also benefits from the Group structure in terms of leveraging relationship, operational structure and cost efficiencies.
“We have some clients who come to us for a second pair of eyes and to benefit from the vantage point that we provide across the industry. They don’t need liquidity services from IS Prime but are looking for risk advisory and consultancy. These clients transact exclusively with ISRA. Other clients transact with us across the Group and access ISRA’s services seamlessly through IS Prime.”
Jonathan Brewer continues, “ How we transact with clients depends on what they need – there is no firm rule – they can access whichever services from across the Group they need to help them to grow their business. The most cost and operationally effective setups, however, are often where we have ISRA advising on technology and risk management (A/B Book client selection, book management, MT4/MT5 maintenance etc.) and IS Prime delivering liquidity solutions along this. In this scenario, we can cross-subsidise products and add significant value to our clients’ businesses.”
Leveraging relationships, operational structure and cost efficiencies
Jeff Wilkins explains further how clients can benefit from the Group structure. He says, “One of the best examples is one of our Hong Kong-based brokers who partners with us for a fully outsourced service. In this case, the ISRA team fully manages the day-to-day technology, trading and operational needs of the client, enabling them to focus on growing their business through client acquisition and support. There is both joint and separate coverage of the account between the IS Prime Hong Kong and ISRA team, depending on the task and the situation. For example, at times, the ISRA team liaises with IS Prime Hong Kong discussing routing rules for specific customer flow, and vice-versa.
“The bottom line is that our brokerage clients are great at sales and marketing and we are great at the rest. With us in the picture – supporting whichever aspects of their trading operations that they need - brokers can focus on growing their business.”
Will Robbins, Managing Director, IS Prime Hong Kong provides a further explanation, “The businesses within the ISAM Capital Markets Group, when working together, have the ability to help a client all the way through the trading workflow, from upstream liquidity and optimising that liquidity for them as well as downstream flow coming up. We make sure that the liquidity is married to the trades and that the trades are married to the liquidity in the most efficient way possible. In addition to seeing the brokers, hedge funds, asset managers and banks as clients, the ISAM Capital Markets Group also views Liquidity Providers as clients and our role is to keep both sets of clients happy. LPs don’t like it when they’re taken advantage of from downstream clients who purport to be one thing but then trade in another style. And downstream clients – i.e. the brokers, hedge funds, asset managers and banks – don’t like being slipped on their trades or having trades rejected, seemingly with no understanding. ISAM Capital Markets Group have the ability to provide both sets of clients with better visibility and a better understanding of each other.”
A complete solution for all sized brokerages
Will Robbins continues, “We work with clients at the start-up phase of their journey as well as some of the world’s largest global businesses. In Asia, for example, we have a lot of early stage clients with big ambitions to grow. They come to us, effectively as a one-stop-shop. These firms are typically cost sensitive and they benefit from the economies of scale that we can offer as a ‘package’ across the Group. We make life simple for them – with a single point of contact across the time zones. With our follow-the-sun model we have a centralised email and phone numbers that are manned throughout the trading week, so there is always someone in the world available to speak to. We know our clients intimately, whether we are talking to them from the HK, London or the US office – and we always have skilled people from our team talking to them.”
“Another benefit for joint clients of IS Prime, IS Prime Hong Kong and ISRA relates to the service we can provide. Invariably, a client will have our liquidity, our bridge and trading technology – perhaps also an MT4 or MT5 white label. This means that we are a single point of contact for client queries and we are also a single point of contact if there is a failure within the whole stack. If there is a technical issue, then we can resolve it as quickly as possible. If, for example, a client has a third party bridge issue or they manage their own MT5 environment, then there will inevitably be areas that we don’t have visibility on which can make the issue slower to resolve. Having a combined offering from the firms within the ISAM Capital Markets Group is a compelling solution for clients.
“Clients can also be reassured that we have resilience in our own systems – we have two independent pricing and matching engines in New York and London, so that if one system goes down, it will immediately fail over to the other.
“To sum up our offering, we help our clients to become more operationally resilient and to optimise their financial performance – and between the companies in the ISAM Capital Markets Group we have the technology, the relationships and the expertise to do this. What’s more, if KYC and compliance procedures go through quickly, we can get a brand-new broker launched in about four weeks – with technology, liquidity and risk services all in place.”
“We have clients who are just liquidity clients, just bridge clients or who just use the risk consultancy services from ISRA. We are flexible and support clients with customizable solutions in whatever areas they need. In Asia, for example, the market is so varied in terms of where the companies are incorporated and the types of business they focus on – be it 100% B Book, 100% A Book and everything in the middle - I think there’s always an area of their business that we can look into and find a solution to offer added value.”
An Extra Set of Eyes
One common misconception amongst potential new clients is that if they use ISRA’s services, then their risk teams will no longer have a role and may therefore become redundant. This couldn’t be further from the truth.
Will Robbins explains, “Our clients can be very good at what they do and when we pitch our risk business to them they can be concerned about giving up their risk management to ISRA. We take the complete opposite view. We can offer them an extra set of eyes, at the front and the back, local systematic analysis and also global macro analysis. For example, to a client in Indonesia, we can say that with our alerting systems we have seen exactly the same kind of trades go through a broker in Cyprus or New Zealand and our recommendation is either to B Book or A Book this kind of business. Our aim is to give the risk guys more tools at their disposal to help them make even better decisions.”
Jonathan Brewer adds, “By volume, a very high percentage of IS Prime’s clients use ISRA’s services. Many of our larger clients use ISRA to help optimise their setups – these organisations are often very complex and they have found that leveraging ISRA’s expertise makes a marked difference to their P&L. As the offering is scalable, many of our smaller clients use ISRA too – we can deliver a service optimised to each client’s needs.”
Providing Added Value
Jeff Wilkins concludes, “The ISAM Capital Markets Group stands out in this industry for its vast sector experience, strong LP relationships and its unique technology, with specialist Flow Analytics and Smart Order Routing. This ensures that brokers’ end-customers can execute on the best possible liquidity pool for their trading style.
“ISRA adds another dimension to IS Prime’s offering. There are always efficiencies in brokers’ businesses and having a fresh set of eyes look at your book, client base, tech and liquidity setup (either individually or across the board) is invaluable. Do we find brokers that are already completely optimised? Yes – but these are very few and far between.
“Ultimately, the value of our combined offering comes down to profits. Relative to the potentially huge impact that working with ISRA and IS Prime can have on a broker’s P&L, the cost of our combined services can be utterly insignificant when weighed against potential lost revenue. ISRA has, in some case, been able to help clients extract literally millions of dollars of extra P&L from their existing book.”