We like working with Family Offices because, in a very different way to purely wealth management businesses, the level of autonomy MFOs and SFOs have in selecting appropriate service providers means that, if successful in our tender, our dealings are can be extremely focussed and totally bespoke to the currency matters presented to us, either on a case by case basis or as part of a wider strategic approach to the client's global currency activities.
Of course Prime Cap is nowhere near as old as any of the bodies corporate we service, but, therein lies our appeal, because, like the network providers we work with, Family Offices can rely on us and our software and systems-partners to do the leg work in bringing them services they would never develop internally.
Reporting, working orders, vanilla hedging and exceptionally tight spreads...each of these require attention and, by working with a focussed boutique like Prime Cap, an FO can reduce time spent and rely on pay-as-you-go experts, rather than hiring one.
A family office might very well turnover currency volumes comparable to us, but, their activity will be dwarfed by that of our other market counter-parties; the reach and product range this gives us, and indeed our FO clients, is noteworthy and distinct from the services and expertise that tend to be accessible to SFOs and MFOs...not because they cannot achieve these arrangements themselves, but, because we employ experts to ensure we can extract more value from these tools.
Much like External Asset Managers and indeed wealth managers, Family Office businesses can use us for sundry or day-to-day currency exchanges as well as longer term hedging and forward buying activities.
A number of businesses in this sphere leave foreign and domestic currency exchanges and payments up to their prime broker. This tends to be because brokerage accounts and instruments are already hosted with them and clearing is convenient, however, dealings are not necessarily conducted at the tightest of spreads.
In our experience a prime broker takes one of two approaches.
Either they consider the day-to-day currency exchange activities of their client as a non-revenue generating add-on service, so they execute 'at market' (whatever that means in this context), or, they view FX activities are an entitlement.
In the latter instance they may approach the exchange competitively, but, as the FX margin applied likely offsets other discounts applied across other products and services, the spread is wider than it might be with a specialist broker like Prime Cap.
Access and insight can be in short supply when one is dealing through a private bank where the focus is borrowing, lending and assets under management .
We sit neatly beside such institutional activity, providing sharp and immovable pricing and simple means of execution.
For what it is worth, as an independently-owned boutique we have found favour with businesses and FOs that like to work with a smaller FX operation. 'Buying British' as it were. This has been an increasingly common position and maybe reflects the emergence of the private equity play/backed acquisitions in the retail foreign exchange space. Personal services suffers as does competition on rates.
Please remember that cost efficiencies, the priority of consumed or acquired FX businesses, do not mean more competitive spreads and services, they simply mean and erosion of expensive experience provided by a broker. An online platform will not call you when the market moves in your favour. Nor will it tailor it's terms to your particular settlement requirements.