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How This Clearing Firm Is Weathering The Coronavirus: 'More Agile And Nimble'

Renato Capelj

Global markets are volatile as the COVID-19 coronavirus continues to send fear and uncertainty through all assets in the investment spectrum.

Velox Clearing, a tech-focused clearing firm, hired Michael Higgins as CEO last month.

Higgins spoke with Benzinga about his role in positioning the firm for survival and executing on emerging growth opportunities.

What Is Velox?

In October of last year, Velox opened its doors as a next-generation clearing solution located in Southern California.

Core offerings include:

  • Clearing, settlement and custody
  • Margin lending and stock loans
  • Prime brokerage solutions
  • APIs integration capabilities

The firm's introduction came as a response to an ongoing industry shift: high-frequency trading and deep discount brokerages have cut into the profitability of incumbent firms and increased barriers to entry.

Higgins told Benzinga that Velox is the answer, with a team of industry veterans who have confronted innovation and customer service head-on.

The company is reducing barriers for RIAs, hedge funds and brokers and delivering an increased customer proposition via a tech focus, he said. 

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Velox's Differentiators: Agility, Client Relationships

“Relatively few clearing firms will talk to and bring on smaller customers these days,” said Higgins. “Our goal is to be customer-centric.”

Velox has worked tirelessly to reduce barriers to entry, its CEO said. 

Existing firms have raised capital minimums to such levels that entrants have a hard time finding a home, he said. 

“Velox was put together to service [the] RIAs, hedge funds, floor brokers and retail shops that can’t afford the $750,000 minimum at Pershing,” he said.

“We believe we have a unique opportunity because there are a lot of firms that are finding it difficult to locate” a home.

The firm’s smaller size and in-house technology team make it more nimble, Higgins said.

"We can work with any correspondent, tailor our back office and clearing suite to what they already have in place and help them easily migrate onto our platform.”

Next Steps: Weathering The Storm, Expansion

“I think the most important thing during any of these times is you need to have a stable system that won’t go down for your customers,” the Velox CEO said. 

Velox has numerous contingencies, such as the existence of multiple locations around the world ready to assist when issues arise, he said. 

Velox is aiming to penetrate the global market, leveraging tech to reduce the cost of transacting or integrating with next-generation technology, Higgins said. 

“The wire fees in some cases are hurting the industry — in terms of being able to get money [overseas]. Those are the innovations we will be working towards.”

Image by Negative Space on Pexels. 

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