With latest acquisition, INTL FCStone builds up its Asia operations

Firm purchases futures and options brokerage and clearing business of UOB Bullion and Futures in Singapore, eyes future regional growth

On October 7, global financial services firm INTL FCStone acquired the futures and options brokerage and clearing business of UOB Bullion and Futures in Singapore.

That deal both confirmed and seemingly catapulted the Asian aspirations of the New York-based firm.

In Singapore, INTL FCStone in one move almost doubled its headcount from 60 to 110, it upgraded its capital markets services license to offer full-service brokerage services, was admitted as a trading member of Singapore Exchange Derivatives Trading Limited, and a clearing member of Singapore Exchange Derivatives Clearing Limited.

As a result, Asia is now a key market and strategic focus for the Fortune 500 company with a nearly 100-year track record and further acquisitions in the region could follow.

Singapore is now the location of the regional Asian headquarters of the firm which also has offices in Beijing, Shanghai, Hong Kong and Sydney.

Up until now, the Asian footprint and operations has been the smallest part of the group. According to Philip Smith, CEO for Asia and EMEA, it has been disproportionately small to the firm’s European and Americas operations.

Smith told The Asset he sees the Asian business mirroring how the Americas and European units developed – both by organic growth and by gradually making acquisitions that add capabilities, new products, access to new markets and new client bases.  

“The UOB transaction would be seen as a typical example of an acquisition that we would make elsewhere in the group, but it's the first time we've done it in Asia,” says Smith.

The INTL FCStone client base is very much the mid-tier market that is underserved by the big banks, which probably don’t want to deal with them as well.

“We've benefited over the last three to four years from significant offboarding by the banks in every region and in every product. They're just raising the minimum threshold to maintain the biggest clients, and as a result of our product offerings and high-touch approach, we've gained substantially,” Smith says.

“We see ourselves as if the banks are the Premier League, we want to be at the top of the Championship and ensure that we're there, and the first port of call for those who do get off-boarded, or may prefer a more high-touch approach to their business,” he adds.

During the global financial crisis, INTL FCStone had to battle its own way through those trying times, and came out much stronger.

“At that time when the banks were pulling all liquidity, we made sure that we were always liquid, but also at the time we had certain businesses that were somewhat hedges to that,” Smith says.

“As examples, our market-making equities business probably had a record year that year, and our global payments had a record year too. So we were one of the few participants in the market that were perfectly positioned to take advantage of the downturn,” he adds.

When it comes to peer competitors in the region, Smith believes that outside of the major banks there is no equivalent company that can offer the same platform as his firm.

The revenue streams flowing into INTL FCStone’s coffers come from diverse multiple parts of the business such as trading, market making, broking, global payments and several other sources, which could see the firm bulk up in readiness to purchase assets or make more acquisitions in Asia.

The interest in sustainable growth and expansion in Asia is an obvious area where INTL FCStone believes they can also grow their business following this latest acquisition.

Their experience of working with charities and NGOs in Europe and North America in delivering funds into sub-Saharan Africa, Asia and Latin America stand them in good stead for expanding to emerging and frontier markets in Asia.

Smith says, “Being able to say you can deliver local currency into a bank account anywhere in the world, especially in developing and emerging markets, within 24 to 48 hours is our normal business, but as you go on, you soon realize that actually it is pretty unique in the world in cross-border payments.”

Date

25 Oct 2019

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