Global Accounts for Alternative Investments
As seen in Delano & Paperjam
Alpha FX is seeking to provide Luxembourg’s fund industry with a better alternative for opening accounts.
It can take months for a bank to open an account for an alternative investment fund, be they specialists in private equity, real estate or debt. Asset managers need to act swiftly to seize market opportunities, but are frequently frustrated by the slowness caused by the one-size-fits-all policies and processes used by traditional banks. These internal policies and processes can impede the smooth functioning of accounts once they are set up.
“Our tailored approach to KYC & AML for the alternative fund space enables account opening procedures to potentially be completed in days, without any compromise on the stringency of the regulatory checks we perform,” explained Nick Maton, Managing Director of Alpha FX’s newly-formed Luxembourg entity.
Traditional banks often have generalised processes which encompass their entire client base (be it retail, corporate, wealth manage- ment, financial, etc.). Inevitably, such generalised policies struggle to work efficiently when faced with the specialised and often complex nature of alternative funds.
“The complexity of how funds are structured makes it difficult for banks to understand the processes, meaning there are inefficiencies in how they can monitor these entities,” Maton said. “The result is often delay for both onboarding and transaction processing.”
Considerable investment was made in building a dedicated team and technology to meet specific processing requirements for alternative funds. Over 120 staff now play a part in the onboarding, settlement and compliance of funds and their investment entities, underpinned by a new and bespoke technology stack. All of this was designed specifically for the complex needs of alternative fund players. The platform also enables clients to view and manage all their accounts in different jurisdictions from a single login.
Alpha FX soft-launched this platform with existing clients in mid-2020, and when version 2.0 of the system was up and running they were able to launch fully into the market.
When asked what Alpha FX expects from the Luxembourg market, Sam Marsh, Institutional MD of Alpha FX turns
the question around.
“It’s more about what the market expects from us, with them telling us about their pain points and us seeing how we can resolve these.”
They will work to build on their existing client base in Luxembourg, and it was from conversations with these clients that the idea grew of creating a global accounts solution dedicated to players in the private markets area. Alpha FX was originally founded in 2009 to offer currency risk management solutions, and conversations with clients over the years revealed a growing market need for an agile alternative to a traditional bank. An IPO by this London-based firm in 2017 gave them the resources they needed to address this opportunity.
The solution resulted from the work of two specialist divisions: Alpha Institutional–which was founded in 2018–and Alpha Platform Solutions– which develops alternative account technology.
“As these divisions worked more closely together, we could see a growing demand for an accounts solution in the alternative space and decided to combine their expertise and capabilities,” said Marsh.
An office in Luxembourg is a key part of this strategy, which will ultimately be led by Maton. He has 30 years’ experience in financial services, half of which have been in the Grand Duchy with J.P. Morgan, HSBC and most recently as Managing Director of Intertrust in Luxembourg. Much of this work has been in the area of banking and the servicing of investment funds.
“Opening this office is a clear commitment to the strategically important Luxembourg market and demonstrates our desire to serve clients here,” said Marsh. “The alternative investment and private capital industries need financial solutions that are entirely dedicated to their marketplace, and so Luxembourg represents a major market opportunity,” he added. “We’re looking forward to Nick taking our offering to the fund industry in this country.”