Joanna Nader, Group Head of Strategy at TP ICAP, talks to Shanny Baser about details, deals and diversity.
Joanna Nader describes herself as being good at spotting opportunities when they came along. This is a perfect attribute for her role as Group Head of Strategy at TP ICAP which she took on in October 2019. Nader was previously a Managing Director at RBC Capital Markets, where she was Head of Diversified/Specialty Financials Research, covering a number of financial companies, including TP ICAP, and the exchange groups.
TP ICAP is the largest of three global inter-dealer brokers and the strategy is to capitalise on this institutional strength, while delivering more efficiently to clients and improving profitability.
Nader says, “Our strategy is around the electronification of our markets; aggregation of our liquidity and delivering liquidity pools in an easy way electronically for our clients; and diversification away from reliance on the inter-dealer oriented business.”
She is involved in deciding on significant organic strategic initiatives throughout the group and responsible for overseeing M&A activities.
“My team endeavours to impose rigour around defining exactly what we are going to do, the resources required, and then we put in place metrics to try to evaluate cost/benefit trade-offs,” added Nader.
A significant M&A deal was the acquisition of Liquidnet which completed in March this year. Nicolas Breteau, Chief Executive Officer of TP ICAP, described the deal as an “important milestone.”
Breteau said in a statement: “Bringing together two highly complementary businesses transforms our growth prospects by materially accelerating the execution of our strategy. Our focus now is on the swift integration of Liquidnet and realising the compelling opportunities to drive higher revenues and returns to shareholders.”
Nader agreed that Liquidnet and TP ICAP are a good fit. Liquidnet brings extensive platform capability, connectivity, and a deep understanding of, and strong trust position with, the buy side. Meanwhile TP ICAP brings decades of trusted relationships with the world’s largest banks, and extensive asset class expertise.
She described Liquidnet as particularly good at large size trade execution in cash equities. In addition, Liquidnet were also at the start of their journey in the corporate bond market and built excellent order/execution management system connectivity with major asset managers which Nader said is very difficult to replicate.
“We intend to leverage that connectivity further, introducing new protocols and additional sources of liquidity, particularly from dealers,” she adds. “Together, we expect to use our strengths to build successful electronic dealer-to-client businesses in corporate bonds and rates products.”
As a result TP ICAP’s focus is not currently on M&A while Liquidnet is integrated and the group ensures that the deal is successful.
Liquidnet Primary Markets
In September the group announced the launch of Liquidnet Primary Markets to provide an electronified debt capital markets (DCM) workflow for new issue announcements alongside a new protocol for trading new issues. Liquidnet had been working on the initiative for some time, in cooperation with a wide range of asset managers, banks and other market participants. The initiative is seen as an essential first step in realizing the ambition of becoming the first agency broker to achieve the end-to-end electronification of the life cycle of a bond.
“The launch of Liquidnet Primary Markets in September was a big deal for us, so soon after closing the acquisition,” said Nader. “Following the completion of the acquisition, at the end of March this year, we accelerated and pushed the project to completion.”
Dan Hinxman, head of sales for Liquidnet Fixed Income, said at the Fixed Income Leaders Summit (FILS) in October that the first step was to get something out into the market and Primary Markets puts the information from syndicate banks into a simple format which can pushed into order management systems (OMSs). In addition, clients can act on a click-to-trade order book from when the deal is live.
Hinxman said: “We have 13 syndicate banks that provide us with information, they give us a lot of feedback about how this is going to work in Phase 1 and then in Phase 2, how there will be that flow of information between the syndicate banks and the buy side.”
In June this year TP ICAP also announced an initiative to launch a wholesale trading platform for crypto assets, in collaboration with Fidelity Digital AssetsSM, Zodia Custody and Flow Traders, a financial technology-enabled liquidity provider.
The new platform, which is subject to registration with the UK Financial Conduct Authority, will include a wholesale electronic marketplace for spot crypto asset trading, including Bitcoin and Ethereum, as well as connectivity and post-trade infrastructure into a network of digital assets custodians. The initial launch is around spot cryptocurrencies and the intention is to expand into other digital assets over time.
Nader said the group is excited about the nascent Digital Assets business.
“As a global markets operator, we want to be innovative and help an institutional market develop,” she added. “Our clients tell us that they need a wholesale venue to trade and manage their risk.”
In October TP ICAP Group hosted an investor seminar focusing on Parameta Solutions, its data and analytics and post-trade solutions business. Before launching the Parameta Solutions brand, the data and analytics business did not have a distinct identity within the group, or in the wider marketplace.
“Other TP ICAP Group businesses are transaction-driven, while data and analytics typically involves a two-year contract to a different customer base, has a 98% renewal rate and 94% of the revenue is recurring,” says Nader. “Parameta also buys data and has been launching a bunch of new products and we wanted it to have its own identity in the marketplace.”
She believes that the biggest potential to change TP ICAP’s share valuation probably comes from Parameta and Liquidnet as they are the types of businesses and earnings streams that tend to be valued highly by the market. Parameta has been growing steadily at double-digit rates and with high margins for a number of years and TP ICAP believes this business is highly valuable.
“Further, if we successfully build Liquidnet’s capabilities in fixed income that should also be a huge value creation opportunity for shareholders,” added Nader. “Lastly, there is also a lot of P&L improvement potential in global broking”
Parameta Solutions is one of TP ICAP’s four business divisions alongside Global Broking, Energy & Commodities and Agency Execution, which includes Liquidnet.
Nader says,“We are relatively complex for a company of our size so we need to do a better job of explaining our business to investors.”
Breteau highlighted in the interim results in September that TP ICAP is diversifying revenues from its leading position in broking. The three business divisions outside Global Broking represented 40% of first half revenues compared to 26% in 2018 when he took over as CEO.
He stressed that the group will continue to invest to execute on its diversification strategy. For example, TP ICAP is rolling out a Hub strategy for Global Broking and Energy & Commodities to electronify the business and aggregate liquidity across brands. Breteau said this is already producing results such as improved contribution margin from the interest rates options platform.
Nader says “The Covid-19 pandemic has made it very clear that electronification is required and made us want to be very clear on our strategy internally and with the market on our continued investments.”
The Group reported revenue of £936m, down 1% on the same period last year in constant currency, including £55m from Liquidnet. Excluding Liquidnet, revenue declined 7% to £881m which the firm said was due to secondary markets being subdued with continuing low interest rates across the G7 and a flattened yield curve.
In 2019 Nader was covering TP ICAP as an analyst at RBC. Prior to RBC she spent nearly 10 years as the Chief Investment Officer of JRJ Group, a private equity firm focused on financial services. Nader also worked at Lehman Brothers, holding roles including Chief of Staff, Office of the CEO Europe, Middle East & Asia.
“I liked the initiatives TP ICAP had started and the potential of a global firm which was a size where you could really contribute to the change programme,” adds Nader.
She recommended that women should definitely go into finance if that is their interest. Her personal strategy is to do things she finds really interesting as she believes that is more likely to lead to success.
Nader notes,,“In terms of advice, I would tell younger women to publicise themselves and push themselves forward.”
Diversity is a topic in financial services and Nader says most organisations are aware of the need to improve diversity but it takes time. She believes organisations need to be cognizant to consider the full diversity of candidates when they are bringing in new hires and there are promotion opportunities but there is now more awareness of barriers that people have to face in terms of education, income, race or gender.
Nader believes, “It is helpful as an organisation to articulate that you want to be inclusive as that does make a difference to people.”
She also describes herself as a pretty hard worker, very detail oriented and willing to take a risk. For example, Nader moved to the UK from Canada after speaking at a conference that her boss couldn’t make and a partner from Arthur Andersen was in the audience. He ended up offering her a job based in London.
“I have never had a five-year plan as one thing has led to another in my career,” she added. “I’ve been good at spotting opportunities when they came along.”
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