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How Apex is driving the digital shift in fintech

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Julie Hyman, Brian Sozzi, and Myles Udland speak with the CEO of Apex Fintech Solutions Bill Capuzzi about the fintech space, what’s happening in the crypto market and Robinhood.

Video Transcript

JULIE HYMAN: Well, we've been talking about cryptocurrencies from all angles this morning, haven't we? We talked about it from the products perspective with Michael Sonnenshein. We just talked about it from the trading perspective with Trey Geske. Now let's talk about the backend, the technology that powers the trading of this various stuff. Bill Capuzzi is with us now, Apex Fintech Solutions CEO. This is a clearing and services firm that, by the way, is going to be going public through a SPAC, a deal that's expected to close in the next couple of months. Bill, it's good to see you. Thanks for joining us this morning. So when we see trading action--

BILL CAPUZZI: Yeah, thanks for having me again.

JULIE HYMAN: Sure, when we see action like we saw overnight, what happens on your side of the business from a clearing perspective, from a trading solutions perspective? And how is that different from what we've traditionally seen, for example, in the trading business?

BILL CAPUZZI: Yeah, that's a great question. I mean, the first part is, you're talking about 24-hour real-time activity, right? So, as you guys know, the US markets-- market officially opens 9:30. It closes at 4 o'clock. Right? There is obviously the pre-market. The post-market as it relates to equities, Bitcoin, cryptocurrency are trading 24 hours a day. And so, from a plumbing perspective, let's talk about what is APEX. We're a platform. And we power most of the fintech providers that are out there.

And as part of that, our job is to make sure things happen frictionless, real-time, that things are happening on a scalable basis. And I think this phenomenon related to cryptocurrency, you know, our pushes to kind of promoting this in the industry is that that should continue in other asset classes as well. Why are we limited to 9:30 to 4 o'clock as it relates to equities when you have things like Bitcoin or Dogecoin trading 24 hours a day?

JULIE HYMAN: I'm curious also, when you get the extreme volatility in cryptocurrencies, from a clearing perspective, does that make things more difficult?

BILL CAPUZZI: It doesn't-- look, to the extent that you build your platform, like we built at Apex that's scalable, right, we can handle multiple, multiple times of the highest market, the highest watermark that we've had. We can handle multiples of that, right? And so you have to be able to handle that scale. And the cool part is it's not just in cryptocurrency. We have activity happening in the options space, the futures space, the equity space, right? And as a platform that we provide to support our customers, like the Webulls and the SoFis and Stashes, one of our jobs is to make sure that we can handle that sort of deluge of volume. Because oftentimes, as you guys know, it happens, right? It's not a steady climb. It's usually very volatile, up and down in terms of the markets.

MYLES UDLAND: Yeah, I mean, Bill, we're looking at some stats here where you guys have trades up almost 200% in the first quarter. I mean, it's kind of this, you know, nine-year-old company, right, that's an overnight success. I'm curious what that first quarter was like for you guys and how, I guess, either it did or didn't make you think about the trajectory of your market opportunity, you know, any differently than you had in the run-up to that kind of crazy period.

BILL CAPUZZI: Yeah, look, the first quarter, for sure, there was some cyclical changes in the industry. You know, we've been looking at and sort of gearing up for this more secular change, right? So you think about what's happened pre-pandemic. You think about zero commission. You think about the fact that we've been in this great bull market for, let's call it now, nine, 10 years. You think about the fact that we're allowing people to start their investing lives with $100 into an account. This trend is just going to continue, right?

And so for us, we've been sort of preparing for this for years, right? And we've had conviction around this democratization of investing, lowering the barriers to entry, and allowing people to invest in their future, right? And rather it be for something for people at a high net worth or ultra high net worth folks, what about the rest? You know, let's just talk about the US. One out of every two people in the United States don't have an investment account, right? And part of the reason for it is it's just been historically been something for people that have a lot of money. And part of the mission, the purpose for APEX is to, on a B2B basis, lower all those barriers to entry and allow people to invest in their future.

JULIE HYMAN: Well, so far, it's working well. A lot more people are doing that, of course. It's my understanding you guys used to serve Robinhood as well. But as we know, Robinhood now clears its own trades. First of all, is there any risk that other clients will do that? But second of all, was that a bad idea? Did Robin-- do you think that that was a bad decision that Robinhood made?

BILL CAPUZZI: Yeah, so start by saying Vlad's but still a good friend. We talk quite a bit. And one thing I'd say is, if he was sitting next to me, he would be the first to say that without Apex, Robinhood wouldn't exist today. All right, so between the two of us, in terms of democratizing, in terms of changing this industry, I think we've made amazing strides to help sort of, again, democratize investing. I think over the course of the last two years since he left in a very public way, he's had challenges. And they're all related to sort of the plumbing, right? Or the vast majority are related to plumbing, right?

Go back to January in terms of infamously him having to raise $3 billion in a weekend. It's all because of pipes and plumbing, as you said. It's about the sort of backend and how to get collateral management, how to get Treasury functions, how to do the things behind the scenes to sort of comply with all the rules and regulations in our industry. It's tough sledding, right? And so the synergy or the symbiotic relationship between, let's just say, a Webull or a SoFi or a Stash or a Goldman Sachs Marcus, who's a client of Apex, and us, is that they focus on the great client experience, this amazing frontend experience that's on a phone. And our job is behind the scenes, make all those things happen in a seamless, kind of dynamic and secure way.

JULIE HYMAN: Well, and maybe to your point, what happened with Robinhood earlier this year is more of a cautionary tale for some of the other clients. Bill, really interesting to get your perspective this morning. I hope you can join us again. Bill Capuzzi is Apex Fintech Solutions CEO.