Finance Magnates spoke with Richard Whelan, CEO of Alpha Trade for his in-depth perspective on his current role and experience in the industry.
What is your background in the investment banking and startups space and how has it prepared you for your current role?
Personally in 1995 having obtained a BA in Economics and Post-Graduate Qualification in Finance in UCD, Dublin, I immediately joined Deutsche Bank where I ran the FX Operations, Money Market Operations and Fixed Income Operations during my four years there having initially worked in the payment investigations team which was not exciting, but gave me a nuts and bolts understanding of the mechanics of cash clearing systems.
I moved to JP Morgan where over eight years I headed up the middle office position keeping unit, FX & Money Market Operations and later moved into projects whereby I carved out a niche whereby the management trusted me to oversee the Infrastructure and Operational (I&O) build out and testing for all new cash and derivative products and then running these divisions until stable, nesting the divisions within the appropriate practice within the bank and then moving onto the next new product.
The number of initiatives are too many to list, but include CLS Operations, inter-entity liquidity FX swaps and General Ledger replacement.
I was subsequently a Programme Manager for UBS’ IRS, CDS and Structured OTC Derivatives business which exposed me to an explosion of new products in a short period overseeing up to 150 new product related projects at any time.
During this time I also represented the US banks in a variety of industry working groups such as various SWIFT Working Groups, DTCC Working Groups, CLS Working Groups and stepping in for my boss on the Federal Reserve Foreign Exchange Committee (FXC).
Just prior to the financial crisis I joined Northern Trust Company as Global Head of Treasury Operations.
My intended role as Global Head of Treasury Operations at Northern Trust was to be to deploy emerging technology to replace human intervention across all cash operations within the bank, but due to the financial crisis I spent two years off-shoring positions from all my global divisions to low cost operating centres, and all technology budgets were zapped.
This alongside the slow-moving nature of decision making with the banks lead me to pivot and utilise all the skills I had developed from working in the slow moving sector of corporate giants as it was self-evident they were not agile enough to adopt the emerging technologies available and keep apace with the market.
During this unstable period I would have weekly calls with the Federal Reserve of Chicago who consulted me to provide colour regarding both the stability of the banking sector and in particular any potential possible future default risks within financial institutions.
This lead me into the broker-dealer business as decision making would be faster and I could effect change at a board level and implement this change within a fraction of the time and cost. I had learnt the backbone of the industry from the Investment Banks, Custodians and Private banks and it was time to put this knowledge to use in a way which could have a much more effective impact.
My first start up was an FCA Regulated Broker-Dealer firm with Marcus Cumberland and we established FIXI PLC and during my period there I was COO and CTO at various points alongside maintaining oversight of the middle office and trading desk.
Whilst there FIXI PLC boomed and we provided liquidity to a range of banks, hedge funds, corporates through to well-known Ultra High Net Worth private clients.
We developed a very aggressive and successful proprietary trading desk in addition to acquiring and integrating the established forex operations of Rosthenthal Collins.
My team also managed sourcing of liquidity and I was responsible for developing a very successful algorithmic arbitrage trading platform which alone covered all the firms’ operating costs.
Having been pivotal in FIXI’s growth from a company acquiring its FCA license through to becoming a bulge bracket institutional liquidity provider executing higher volumes than most banks with a tiny fraction of the human resources requirement via adopting this emerging eFX technology, the only logical onward step was to run my own broker-dealer.
Since FIXI PLC I have since acquired regulatory licencing directly and was Managing Director for two highly scalable FCA Regulated broker-dealers servicing retail and institutional clients, and an FCA Regulated asset management firm, alongside establishing and being Chief Executive of an FCA Regulated Electronic Money Institution.
The combination of all the above has positioned me perfectly to launch my first broker-dealer as an owner and Chief Executive alongside my valued partners and our experienced management team whom I have known and respected for many years.
Our talents lie in vastly differing areas and we have diverse personalities, however we always reach consensus via this diversity through examining all the angles and mitigating all risks without hindering sustainable growth with our clients’ interests always at the forefront of our minds.
Can you elaborate on your experience and involvement with Alpha Trade, namely your input in new and innovative product offerings?
Alpha Trade was born out of many conversations with the partners, Senior Partners and Heads of Regulatory Compliance at a substantial Law firm and an Equities Trader at Deutsche Bank, proprietary foreign exchange trader at Axi and head of risk at VantageFX, who since has built two successful FinTech firms whose technology now powers much of Alpha Trades business.
Alongside the above we have a seasoned CTO (Dean Yu) with vast experience with all industry standard technology and all the proprietary technology provided via these firms.
Our mission is absolutely clear, we identified a gap within the institutional and buy side space for a clean, ethical, transparent liquidity provider who could source both the best and most unique liquidity in the market via our connections without going down the prime of prime route with all the usual suspects essentially re-cycling Citibank and Barclays pricing as their own.
We developed and own sources of liquidity from a wide range of sources and match it specifically to our clients demands.
We specifically targeted the best Investment Banks for their liquidity in the market, the best hedge funds in the market, added one broad spectrum liquidity provider to lock in the standard eFX bank feeds and to add an additional edge we source liquidity from a number of other large, but bespoke liquidity pool’s who could supply skewed pricing which makes our pricing unique and flexible for foreign exchange and precious metals.
We have replicated this approach in Digital Asset liquidity sourcing through following extensive investment researching every part of this industry for months. We see liquidity provision in Digital Assets as the next big thing and we are already, without question, the leader in the field.
Our goal is to develop relationships with hundreds of high frequency clients ranging from broker-dealers to hedge funds, Family Offices and other buy side players and collaborate utilising our existing OTC price generation technology to create bespoke deep liquidity pools which precisely match their execution requirements by matching them with liquidity providers that are keen to consumer their flow.
We rarely, if ever, get client complaints. It is a true partnership on the client side and our liquidity providers are more than happy to provide us their choice feeds as they know that we fully understand why they have given us the lines they have and we do not allow these to be exploited or open to abuse.
Since assuming the Chief Executive role in February of this year our volumes have increased five-fold by the end of April at around 1.2 billion a day, and we expect this to increase by 70% in June 2022. Months of extremely hard work put truly horizontally scalable infrastructure in place and quietly acquiring our network of clients is now paying off.
It is a balancing act but after twenty-seven years in the industry I know every participant in the industry and those that I do not know, my partners know them well, so there is a wealth of goodwill invested in this business, which we are not about to burn.
Where does Alpha Trade fit into the broader market and in what ways does the company differ from the competition?
Our edge is simple. We can provide dedicated bespoke liquidity pools that match our client or their clients’ requirements perfectly and avoiding conflict with our liquidity providers’ concurrently.
Many of our clients click and trade in clips of up to USD 100m and many others algo trade in USD 100k clips and we have suitable pools for all of them due to the diversity of liquidity we have sourced.
Given this we can offer pricing at depth which is unparalleled which is why really big hitters and large “hedging” firms come to me. They are happy to hit our prices in USD 50m in majors and achieve a better VWAP than machine gunning the entire market.
Our fill ratio once a client is parked into their bespoke pool is in excess of 99.9%. This surety of execution at such competitive pricing at depth is something no other firm can offer in practice. All our competitors have the same top of book headline prices, but at depth we differentiate ourselves massively.
Everyone can show choice prices London day half the time in EURUSD, but consistently offering tight pricing at depth is something very few are willing to offer and at our price point, we sit alone.
What are some of the biggest challenges companies in the retail industry face?
Alpha Trade does not operate in the retail space and only accepts institutional or professional clients. We do have a growing population of ASIC Retail Broker-Dealer clients who consume our liquidity alongside several global retail broker-dealer clients.
Putting aside the vast changes to the regulatory environment, many operators in the retail space have not adapted to change and still hunt “soft flow” which barely exists in our business.
Couple this and the prevalence of martingale to averaging grid algos that are so prevalent now alongside a stubborn approach towards not actively managing their risk book plus a lack of volatility which has punished these firms over the last five years. Volatility is back, for now, but these firms need to adapt or die in our opinion. They need to partner with a suitable liquidity provider who can match their risk hedging strategies. Alpha sits comfortably in this space.
Compare this however to the East with the phenomenal innovation in Digital Asset trading technology the retail market has become much more diverse, smarter and the old model of targeting soft FX flow is practically dead as we see it. It is scorched earth. Every retail broker ought to manage risk smartly and create new ways to generate income via additional products.
Alpha Trade can help these brokers with our liquidity provision which alongside an exceptional FX and Metals our offering also includes Digital Assets, Single Name Stocks and a vast variety of other CFD asset classes. This empowers their clients to diversify their trading portfolios and gain access to markets previously unavailable via a single platform. And as these brokers adopt a more risk aware approach and STP or hedge we are finding them calling us to assist them to optimise their trading P&L.
Are there any new developments in the pipeline at Alpha Trade in H2 2022 and beyond?
We have a five-year plan for the firm which includes the addition of a Digital Bank, building a deliverable crypto offering via a separate regulated entities and obtaining an independent FCA asset management license which essentially will be deployed to manage the profits of the firms, bonuses to employees and company profits. Every cent we make over this period, we intend to invest back into what will be larger network of regulated companies.
Short term we are 100% focused on pushing our CFD Derivative pricing onto the market as we cannot find a competitor east or west who can beat our pricing/commission combination. A bold statement but we have yet to find one. Six months hard work has paid off and as with the FX and Metals business we will seek to expand our sales and diversify our product offering globally aggressively throughout 2022 and 2023 whilst we work towards our strategic goals.
With our FinTech firms we have established a broker in a box solution ranging everything required for any new start up broker from trading platforms, copy trade tech, PAMM/MAMM, hosting, CRM, Liquidity and most importantly arguably our guidance and experience. There is an array of tech products not covered here but there is not enough space to cover everything.
We will look to expand sales aggressively into Europe, Middle East and Latin America over the coming year and hope to achieve the same successes we have had in Australasia in an incredibly short time frame. Our exceptional growth to date has been without a single salesperson….
Africa too is an opportunity we are examining and with our array of products we believe we can offer an alternative to existing operators in this region with a more targeted approach.
Our culture is really one of East meets West as we adopt the strict regulatory requirements of FCA regulated firms given my background (and obviously as an ASIC Regulated firm) and in a prudent manner source the best-in-class liquidity across as wide an array of products over time where we present a value proposition to the institutional market.
If we cannot rate ourselves in the top three liquidity providers in any asset class, we simply will not offer those products. This is a trading session by trading session benchmark we measure ourselves against all key competitors and will be a key to our long term success.
The firm was established in the 1990’s, but we only acquired it twelve months ago and for nine months focussed on investment in infrastructure, robust operations, recruitment of the best talent and of course sourcing the best liquidity.
Since I took on the position of CEO in January this year our volumes have grown threefold, the firm is profitable, we have secured some extremely high profile clients and we can only see a bright future ahead if we stick to our core principals which include adopting to change in a controlled and prudent manner leveraging our combined core industry experience. And, of course, always listen to our clients demands.
Finally, I would like to thank you for your time and patience in listening to my vision for Alpha Trade!
Please feel free to contact Richard directly via [email protected] or message him via linkedin or Alpha Trade directly through [email protected] or [email protected].
Finance Magnates spoke with Richard Whelan, CEO of Alpha Trade for his in-depth perspective on his current role and experience in the industry.
What is your background in the investment banking and startups space and how has it prepared you for your current role?
Personally in 1995 having obtained a BA in Economics and Post-Graduate Qualification in Finance in UCD, Dublin, I immediately joined Deutsche Bank where I ran the FX Operations, Money Market Operations and Fixed Income Operations during my four years there having initially worked in the payment investigations team which was not exciting, but gave me a nuts and bolts understanding of the mechanics of cash clearing systems.
I moved to JP Morgan where over eight years I headed up the middle office position keeping unit, FX & Money Market Operations and later moved into projects whereby I carved out a niche whereby the management trusted me to oversee the Infrastructure and Operational (I&O) build out and testing for all new cash and derivative products and then running these divisions until stable, nesting the divisions within the appropriate practice within the bank and then moving onto the next new product.
The number of initiatives are too many to list, but include CLS Operations, inter-entity liquidity FX swaps and General Ledger replacement.
I was subsequently a Programme Manager for UBS’ IRS, CDS and Structured OTC Derivatives business which exposed me to an explosion of new products in a short period overseeing up to 150 new product related projects at any time.
During this time I also represented the US banks in a variety of industry working groups such as various SWIFT Working Groups, DTCC Working Groups, CLS Working Groups and stepping in for my boss on the Federal Reserve Foreign Exchange Committee (FXC).
Just prior to the financial crisis I joined Northern Trust Company as Global Head of Treasury Operations.
My intended role as Global Head of Treasury Operations at Northern Trust was to be to deploy emerging technology to replace human intervention across all cash operations within the bank, but due to the financial crisis I spent two years off-shoring positions from all my global divisions to low cost operating centres, and all technology budgets were zapped.
This alongside the slow-moving nature of decision making with the banks lead me to pivot and utilise all the skills I had developed from working in the slow moving sector of corporate giants as it was self-evident they were not agile enough to adopt the emerging technologies available and keep apace with the market.
During this unstable period I would have weekly calls with the Federal Reserve of Chicago who consulted me to provide colour regarding both the stability of the banking sector and in particular any potential possible future default risks within financial institutions.
This lead me into the broker-dealer business as decision making would be faster and I could effect change at a board level and implement this change within a fraction of the time and cost. I had learnt the backbone of the industry from the Investment Banks, Custodians and Private banks and it was time to put this knowledge to use in a way which could have a much more effective impact.
My first start up was an FCA Regulated Broker-Dealer firm with Marcus Cumberland and we established FIXI PLC and during my period there I was COO and CTO at various points alongside maintaining oversight of the middle office and trading desk.
Whilst there FIXI PLC boomed and we provided liquidity to a range of banks, hedge funds, corporates through to well-known Ultra High Net Worth private clients.
We developed a very aggressive and successful proprietary trading desk in addition to acquiring and integrating the established forex operations of Rosthenthal Collins.
My team also managed sourcing of liquidity and I was responsible for developing a very successful algorithmic arbitrage trading platform which alone covered all the firms’ operating costs.
Having been pivotal in FIXI’s growth from a company acquiring its FCA license through to becoming a bulge bracket institutional liquidity provider executing higher volumes than most banks with a tiny fraction of the human resources requirement via adopting this emerging eFX technology, the only logical onward step was to run my own broker-dealer.
Since FIXI PLC I have since acquired regulatory licencing directly and was Managing Director for two highly scalable FCA Regulated broker-dealers servicing retail and institutional clients, and an FCA Regulated asset management firm, alongside establishing and being Chief Executive of an FCA Regulated Electronic Money Institution.
The combination of all the above has positioned me perfectly to launch my first broker-dealer as an owner and Chief Executive alongside my valued partners and our experienced management team whom I have known and respected for many years.
Our talents lie in vastly differing areas and we have diverse personalities, however we always reach consensus via this diversity through examining all the angles and mitigating all risks without hindering sustainable growth with our clients’ interests always at the forefront of our minds.
Can you elaborate on your experience and involvement with Alpha Trade, namely your input in new and innovative product offerings?
Alpha Trade was born out of many conversations with the partners, Senior Partners and Heads of Regulatory Compliance at a substantial Law firm and an Equities Trader at Deutsche Bank, proprietary foreign exchange trader at Axi and head of risk at VantageFX, who since has built two successful FinTech firms whose technology now powers much of Alpha Trades business.
Alongside the above we have a seasoned CTO (Dean Yu) with vast experience with all industry standard technology and all the proprietary technology provided via these firms.
Our mission is absolutely clear, we identified a gap within the institutional and buy side space for a clean, ethical, transparent liquidity provider who could source both the best and most unique liquidity in the market via our connections without going down the prime of prime route with all the usual suspects essentially re-cycling Citibank and Barclays pricing as their own.
We developed and own sources of liquidity from a wide range of sources and match it specifically to our clients demands.
We specifically targeted the best Investment Banks for their liquidity in the market, the best hedge funds in the market, added one broad spectrum liquidity provider to lock in the standard eFX bank feeds and to add an additional edge we source liquidity from a number of other large, but bespoke liquidity pool’s who could supply skewed pricing which makes our pricing unique and flexible for foreign exchange and precious metals.
We have replicated this approach in Digital Asset liquidity sourcing through following extensive investment researching every part of this industry for months. We see liquidity provision in Digital Assets as the next big thing and we are already, without question, the leader in the field.
Our goal is to develop relationships with hundreds of high frequency clients ranging from broker-dealers to hedge funds, Family Offices and other buy side players and collaborate utilising our existing OTC price generation technology to create bespoke deep liquidity pools which precisely match their execution requirements by matching them with liquidity providers that are keen to consumer their flow.
We rarely, if ever, get client complaints. It is a true partnership on the client side and our liquidity providers are more than happy to provide us their choice feeds as they know that we fully understand why they have given us the lines they have and we do not allow these to be exploited or open to abuse.
Since assuming the Chief Executive role in February of this year our volumes have increased five-fold by the end of April at around 1.2 billion a day, and we expect this to increase by 70% in June 2022. Months of extremely hard work put truly horizontally scalable infrastructure in place and quietly acquiring our network of clients is now paying off.
It is a balancing act but after twenty-seven years in the industry I know every participant in the industry and those that I do not know, my partners know them well, so there is a wealth of goodwill invested in this business, which we are not about to burn.
Where does Alpha Trade fit into the broader market and in what ways does the company differ from the competition?
Our edge is simple. We can provide dedicated bespoke liquidity pools that match our client or their clients’ requirements perfectly and avoiding conflict with our liquidity providers’ concurrently.
Many of our clients click and trade in clips of up to USD 100m and many others algo trade in USD 100k clips and we have suitable pools for all of them due to the diversity of liquidity we have sourced.
Given this we can offer pricing at depth which is unparalleled which is why really big hitters and large “hedging” firms come to me. They are happy to hit our prices in USD 50m in majors and achieve a better VWAP than machine gunning the entire market.
Our fill ratio once a client is parked into their bespoke pool is in excess of 99.9%. This surety of execution at such competitive pricing at depth is something no other firm can offer in practice. All our competitors have the same top of book headline prices, but at depth we differentiate ourselves massively.
Everyone can show choice prices London day half the time in EURUSD, but consistently offering tight pricing at depth is something very few are willing to offer and at our price point, we sit alone.
What are some of the biggest challenges companies in the retail industry face?
Alpha Trade does not operate in the retail space and only accepts institutional or professional clients. We do have a growing population of ASIC Retail Broker-Dealer clients who consume our liquidity alongside several global retail broker-dealer clients.
Putting aside the vast changes to the regulatory environment, many operators in the retail space have not adapted to change and still hunt “soft flow” which barely exists in our business.
Couple this and the prevalence of martingale to averaging grid algos that are so prevalent now alongside a stubborn approach towards not actively managing their risk book plus a lack of volatility which has punished these firms over the last five years. Volatility is back, for now, but these firms need to adapt or die in our opinion. They need to partner with a suitable liquidity provider who can match their risk hedging strategies. Alpha sits comfortably in this space.
Compare this however to the East with the phenomenal innovation in Digital Asset trading technology the retail market has become much more diverse, smarter and the old model of targeting soft FX flow is practically dead as we see it. It is scorched earth. Every retail broker ought to manage risk smartly and create new ways to generate income via additional products.
Alpha Trade can help these brokers with our liquidity provision which alongside an exceptional FX and Metals our offering also includes Digital Assets, Single Name Stocks and a vast variety of other CFD asset classes. This empowers their clients to diversify their trading portfolios and gain access to markets previously unavailable via a single platform. And as these brokers adopt a more risk aware approach and STP or hedge we are finding them calling us to assist them to optimise their trading P&L.
Are there any new developments in the pipeline at Alpha Trade in H2 2022 and beyond?
We have a five-year plan for the firm which includes the addition of a Digital Bank, building a deliverable crypto offering via a separate regulated entities and obtaining an independent FCA asset management license which essentially will be deployed to manage the profits of the firms, bonuses to employees and company profits. Every cent we make over this period, we intend to invest back into what will be larger network of regulated companies.
Short term we are 100% focused on pushing our CFD Derivative pricing onto the market as we cannot find a competitor east or west who can beat our pricing/commission combination. A bold statement but we have yet to find one. Six months hard work has paid off and as with the FX and Metals business we will seek to expand our sales and diversify our product offering globally aggressively throughout 2022 and 2023 whilst we work towards our strategic goals.
With our FinTech firms we have established a broker in a box solution ranging everything required for any new start up broker from trading platforms, copy trade tech, PAMM/MAMM, hosting, CRM, Liquidity and most importantly arguably our guidance and experience. There is an array of tech products not covered here but there is not enough space to cover everything.
We will look to expand sales aggressively into Europe, Middle East and Latin America over the coming year and hope to achieve the same successes we have had in Australasia in an incredibly short time frame. Our exceptional growth to date has been without a single salesperson….
Africa too is an opportunity we are examining and with our array of products we believe we can offer an alternative to existing operators in this region with a more targeted approach.
Our culture is really one of East meets West as we adopt the strict regulatory requirements of FCA regulated firms given my background (and obviously as an ASIC Regulated firm) and in a prudent manner source the best-in-class liquidity across as wide an array of products over time where we present a value proposition to the institutional market.
If we cannot rate ourselves in the top three liquidity providers in any asset class, we simply will not offer those products. This is a trading session by trading session benchmark we measure ourselves against all key competitors and will be a key to our long term success.
The firm was established in the 1990’s, but we only acquired it twelve months ago and for nine months focussed on investment in infrastructure, robust operations, recruitment of the best talent and of course sourcing the best liquidity.
Since I took on the position of CEO in January this year our volumes have grown threefold, the firm is profitable, we have secured some extremely high profile clients and we can only see a bright future ahead if we stick to our core principals which include adopting to change in a controlled and prudent manner leveraging our combined core industry experience. And, of course, always listen to our clients demands.
Finally, I would like to thank you for your time and patience in listening to my vision for Alpha Trade!
Please feel free to contact Richard directly via [email protected] or message him via linkedin or Alpha Trade directly through [email protected] or [email protected].
Source: https://www.financemagnates.com/thought-leadership/taking-alpha-trade-to-the-top/