MFEX strong growth in Switzerland driven by flexible solutions
Mr. Hayat, how to explain and characterize the strong growth of MFEX?
In 1999, two of our current Board members founded MFEX on the values of transparency and independence. Our values have not changed and are the key to our strong organic growth. MFEX rapidly expanded and opened many offices to be closer to our clients: Paris in 2006, Switzerland in 2013, Singapore in 2014, and many others. From 2010 to 2017, MFEX experienced significant organic development. Nordic Capital, a private equity firm, partnered with MFEX’s founders, Olivier Huby and Oliver Lagerström who launched MFEX in 2003, in early 2018, and provided MFEX with the resources to reposition itself from a Nordic player to a pan-European leader with an emerging global presence. Thanks to acquisitions and organic initiatives from Nordic Capital, we have grown our assets under administration fourfold and have become one of the key platforms for fund distribution.
In the wake of our success, we acquired and integrated Natixis’ platform, Axeltis, Ahorro Best Funds’ distribution platform, Société Générale Security Services (SGSS)’ Global Fund Trading (GFT), which manages post-market services offered to funds, and RBC’s Global Fund Platform, which widened our offering of services and our international footprint. By the end of 2020, we became the second largest European player by building ourselves around the clients’ needs. Today, MFEX has 350 distributors and 960 management companies among its customers. All of this paved the way for the next stage of MFEX’s growth with an industrial partner to become the largest investment platform, which we found in Euroclear.
What does MFEX bring to the Swiss market?
We have been present in Switzerland since 2014, with an office in Geneva, where we have been serving the largest banks in the region, and recently opened a new office in Zurich. This extension complements our offer to the Swiss market. The two offices now allow MFEX to leverage on its strong regional foundation to deepen its relationship with distributors and asset managers, as well as winning new clients in the region. We continue our focus on excellent customer service and on developing innovative value-adding services for both distributors and fund companies.
The Swiss market has shown a huge appetite for hedge funds, and this appetite is not new. Unlike mutual funds, hedge funds are very manual, time-consuming and require a lot of resources. Knowing that, we decided to acquire the GFT platform from SGSS that has 20 years’ experience in hedge funds, obtaining the platform, the technology and the staff’s experience. We now offer a hedge fund service which has been very much anticipated in Switzerland. This universe today covers over 6,000 funds and 450 fund managers. Our most significant added value to the Swiss market is our modular approach in all the products we propose, offering all distributors the option to build their own tailor-made set of value-added services.
MFEX has been acquired by Euroclear, a Belgian-based financial services company, from Nordic Capital, a private equity firm. What are you expecting from this acquisition and what are its perspectives?
The transaction is expected to close in the second half of 2021, subject to customary closing conditions and regulatory approvals. Thanks to the complementarity of our combined services, we are able to remain focused on delivering superior client service throughout the closing period. We built a platform that follows a market infrastructure model, open, independent and neutral at the service of the two players in the value chain: distributors and management companies. We can already tell you that we are delighted by this acquisition because it will significantly increase our value proposition for fund distributors and fund management companies, providing them with access to a unique universe of counterparties and with new business development opportunities. We will service approximately 3 trillion Euros of fund assets.
What are the clients’ needs at the moment? What are the growth perspectives in the next years?
Many large distributors (life insurers and banks) contact MFEX to outsource certain services that are not part of their core business like funds distribution, rebate collection, KYCs, and data solutions.
- The latter to save costs and instantly benefit from the library of funds listed on the platform and benefit from experts and experienced teams. MFEX has the possibility to centralize efforts and trailer fees rates between different entities of European distributors, with the goal of harmonization and increase of revenues.
- MFEX has always been ahead of regulations thanks to its transparency, which is MFEX’s DNA. In that sense, since 2016 we have developed and digitalized a webtool to meet a growing B2B demand. Global Fund Watch is a compliance platform, bringing together 1,700+ counterparties, facilitating and accelerating exchanges between them. This KYC and KYD tool is complementary to the services provided within the framework of the onboarding of a distributor and asset managers.
- Likewise, the data required for fund managers are becoming more and more numerous and precise, which has led MFEX to develop a data collection service that allows clients to collect for each fund the data points they want, at the frequency and in the format they want. There is a real appetite from asset managers and distributors for data and now market data intelligence. All of them want to verify that they have the right information to monitor their investment.
How do you adapt to the end of the distribution legal regime in Switzerland?
In substance this will not change the service nor the nature of our legal obligations towards our Swiss clients. MFEX has always been promoting transparency across the distribution model and adopting best market practices.
All in all, this can be seen as an opportunity to streamline and simplify the contractual framework. This further allows our Swiss clients to leverage on our EU global agreements, expanding the fund offer while guaranteeing distribution rules as we know it within EU with MIFID and investors protection.
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Frédéric Hayat, Director and Country manager for Switzerland, joined MFEX in 2016 and set up the company in Geneva, and later in Zurich. Before joining MFEX, he worked for 25 years in the brokerage industry in Paris, London and Geneva, including firms like BGC Partners and Tullett Prebon. Frédéric Hayat is holding an MBA degree from The University of Chicago Booth School of Business.