Interactive Brokers a US-based online securities brokerage with operations in Europe and Asia has announced a partnership with Sinopac Securities, one of Taiwan’s leading securities trading firms. Interactive Brokers have been named as the primary international broker for the Taiwanese firm.
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Why would Sinopac appoint Interactive Brokers?
Sinopac’s institutional and retail clients will now be able to trade a full range of US stocks, bonds and ETFs via Interactive Brokers, and will also get access to another 90 stock markets worldwide.
The initiative will also provide Sinopac’s clients with fractional share trading, extended ETF trading hours, as well as algorithmic order types and execution services, that are not currently available elsewhere in Taiwan.
These services will be provided to Sinopac Securities by Interactive Broker’s prime brokerage business which offers turn-key white-label solutions to introducing brokers or IBs.
Providing them with access to advanced trading platforms, and helping to reduce their operational, brokerage and clearing costs. Under a white label arrangement, the introducing broker gets access to front ends and reporting that are branded in their livery.
The prime brokerage business also supports IBs in areas such as regulatory reporting, multi-currency account funding, and client relationship management, or CRM.
Interactive Brokers are not the only online broker to offer white-label and prime brokerage services. For example, Danish bank and broker Saxo offers its own white-label solutions to regulated entities and it can provide these services on a disclosed or undisclosed client basis.
Saxo assists white-label customers in areas such as KYC and due diligence, risk management and market data and offers them access to all of its front-end trading solutions.
Saxo also offers specific support to Robo Advisors who have their own front end, but who may wish to utilise managed account technology, and or, specialist execution and post-trade services, such as custody and reporting. The firm also offers collateral management and overnight financing for leveraged trades.
By offering White-label and Prime Brokerage solutions to third parties, established trading businesses such as Interactive Brokers and Saxo allow smaller businesses and start-ups to get a head start, and to control their costs by leveraging off of the larger firms’ infrastructure and expertise. Allowing them to roll out a far wider range of services to their own client base than would otherwise be possible.
IBKR, white labels and prime brokerage
Prime brokerage and white labels can help to fast-track investment and trading businesses and allow the business owners to focus on growing their client base, their business and returns, whilst leaving the Prime Brokerage to manage the day-to-day processing, reporting and the technology stack.
Such initiatives are to be welcomed but as with all relationships they need to be carefully managed, as they can present a reputational and business risk to the end providers.