Tiger Brokers
Keith Lee
15 October 2024
Tiger Brokers鈥� Keith Lee, CFA, managing director, APAC head of securities finance and borrow, speaks to Carmella Haswell about the company鈥檚 SBL expansion in Asia, as well as the evolution of SBL in the retail investor space
Image: Keith Lee
Over the last 20 years, the prime brokerage segment has expanded dramatically in the Asia Pacific region. This growth looks set to continue as equity markets persevere in their development from an institutional and client perspective.
According to Keith Lee, CFA, managing director, APAC head of securities finance and borrow at Tiger Brokers (HK) Global, there are two main contributors to this acceleration. First is the introduction of new asset classes such as cryptocurrencies, which require execution and financing services. Second is the increasing number of family offices being established in Asia.
Emerging asset classes, particularly crypto-related securities, are gaining traction and demand increased attention in the APAC region. Among other trends, the rise in client groups such as family offices present unique service opportunities within this sector.
For Tiger Brokers, there is a significant opportunity to bridge the gap between local traditional brokerages and international brokerages.
鈥淏y positioning ourselves as an intermediary, we aim to facilitate smoother transactions and enhance connectivity between these two segments,鈥� says Lee. 鈥淯ltimately, our strategic goal is to establish Tiger Brokers as a leading wholesaler in the retail investor space, harnessing these trends and our unique market position to drive growth and deliver value to our clients.鈥�
The retail investor
Harnessing his expertise in the market, Lee indicates that the evolution of securities borrowing and lending (SBL) in the retail investor space can be examined from two perspectives.
Considering retail investors as securities borrowers in the Hong Kong market, Lee observes a gradual increase in both the number of transactions and notional value. However, these figures remain significantly smaller compared to those of institutional investors.
On the other hand, retail investors are becoming increasingly important as securities lenders in Hong Kong's SBL ecosystem. Through yield enhancement programmes and margin accounts, the securities inventory of retail investors can be efficiently lent out.
He adds: 鈥淲e鈥檝e seen consistent growth in both the total borrow notional and the number of securities sourced from retail investors, highlighting their growing significance in this space.鈥�
Tiger Brokers is an online brokerage group that holds a brokerage licence in Singapore, the US, New Zealand, and Australia. Specialising in serving retail investors and a range of clients, Tiger Brokers Hong Kong (TBHK) has expanded into the SBL and financing business under Lee鈥檚 leadership.
Tiger Brokers' business strategy primarily focuses on strategically developing and launching products and markets in a sequential manner. A number of factors influence the firm鈥檚 strategic decisions, including the complexity of product development, potential return on investment (ROI), required IT resources, staffing needs, market demand, competitive landscape, and regulatory compliance.
鈥淏y carefully weighing these factors, we aim to optimise our resource allocation and maximise the value we provide to our clients and stakeholders,鈥� adds Lee.
The firm also seems to be maximising value through its recent announcement with the Pan Asia 色花堂Lending Association (PASLA) 鈥� which indicates that the company has become the first retail fintech broker to join the association as a member.
Through its membership, Tiger Brokers will work alongside traditional financial institutions to advance the SBL business.
The company views PASLA as a crucial partner in its future business development, where its various working groups provide 鈥渋nvaluable鈥� clarification on rules and regulations, as well as guidance on general market practices.
Lee explains: 鈥淲e are excited to be a member of PASLA. It proves that we鈥檝e met the market standard set by other PASLA members, which are top-tier professional participants. This demonstrates our efforts and commitment to the SBL and financing business.鈥�
As Tiger Brokers only recently established its SBL desk in Asia, its PASLA membership has significantly enhanced the company鈥檚 recognition among industry peers across the Asia Pacific region, the firm comments.
Consequently, Lee says the company has received an increase in business inquiries, and potential counterparties have shown greater confidence in its product offerings.
Expanding its reach
Tiger Brokers鈥� approach to providing prime brokerage services is centred on catering to a specific group of clients.
Lee explores: 鈥淲e develop our products to meet the unique demands of this targeted client segment. In determining which client group to focus on, our primary consideration is client quality. We assess this by thoroughly evaluating each client's background and financial condition.鈥�
He views market volatility, increased demand for liquidity, and regulatory changes not as challenges, but as opportunities. At Tiger Brokers, the firm aims to foster a 鈥渃ulture of innovation鈥�, constantly seeking new and improved ways to conduct business. This approach, it says, allows the company to differentiate itself in the market and turn potential challenges into competitive advantages.
鈥淭iger Brokers plans to expand its client base and counterparty relationships, enhance borrow quality, increase its securities lending inventory, and optimise the firm鈥檚 operational processes.鈥�
Looking ahead over the next 12 months, Tiger Brokers plans to expand its client base and counterparty relationships, enhance borrow quality, increase its securities lending inventory, and optimise the firm鈥檚 operational processes to handle higher transaction volumes more efficiently.
In his conclusion, Lee says: 鈥淎s a global entity, we'll continue to use our international presence, fostering collaboration across regions, to create new business opportunities.
鈥淲hile we can't disclose specific projects at this time, our focus remains on strengthening our market position and delivering enhanced value to our clients in the securities lending and borrowing space.鈥�
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