Towards the end of last year, brokerage group B2PRIME launched a retail brokerage offering.
Given the firm has been solidly in the institutional space for over a decade, I thought this was a bit of a peculiar move to make. So what gives?
We spoke to Alex Tsepaev – Chief Strategy Officer at B2PRIME – to find out.
I thought it was unusual that B2PRIME decided to launch a retail brand. Why did you make that decision?
We’ve always operated with three brands. One is our core trading and IT infrastructure brand, under which we sell technology products like trading platforms. The second is our payments business, and the third is our institutional prime brokerage business.
So as you can see, we have always focused on institutional clients. At a certain point, we decided to launch a new retail brand because we already have all the necessary infrastructure. Moreover, this is all fully ring-fenced with no overlap with the core team. We’re targeting more privileged clients, as our heart remains in institutional business.
What we lacked was direct feedback on our products from traders themselves, not just broker clients. Launching retail allowed us to get that feedback and receive it from end-users.
At the same time, we felt ready to grow our business in a new vertical. Why not, right? If you look at other players in our industry, having B2B and B2C helps grow the balance sheet, helps improve internal processes and so on.
The retail broker market is very saturated. What can you bring to the market that’s different?
The market is crowded, but we have some strong advantages because of our technology. Our trading platform supports crypto perpetual futures and CFDs on the same system, for example, which almost no other providers can do. We are building a new generation broker in order to show how it can be done, and we hope that our clients will follow us, because the main goal is to bring innovation to the market.
Very few brokers offer multiple asset classes on one platform. Next year we’ll add traditional instruments like ETFs, stocks, and futures, and later options. If you look at US brokers like Charles Schwab or Interactive Brokers, they offer everything in one place. Outside the US, that’s rare. We already have the infrastructure, licences, and development speed to move in that direction but we can also attract a global client base.
A lot of providers seem to be offering perpetual futures but they are actually just CFDs. What’s up with that?
Financial innovation basically stopped decades ago. What changes now are delivery models, platforms, and automation. Perpetual futures in crypto are very similar to CFDs but with a different funding mechanism. Instead of swap rates, you have funding rates that are charged several times per day. So in substance, they’re very similar, but a lot of it is about clever branding, as you alluded to.
B2C seems a lot more stressful than B2B. More clients, more regulations, more partners, and so on. Are you ready for that?
You’re never fully ready but we have created a completely separate retail operation, with support, operations, and commercial teams, staffed with experienced industry professionals. We also hired people with strong SaaS backgrounds to bring metrics, dashboards, and KPI-driven processes. So it’s the start of a journey, for sure, but we have done a lot of preparation for it.
Do you have a plan in terms of where you will target?
Regulation dictates a lot. In Europe, for example, we can currently serve only institutional or professional clients. Retail will come later once we expand our licensing footprint and product coverage, especially into traditional instruments. Initially, we’re focusing on Latin America, then the Middle East, and then Asia.
Are you concerned about competing with your existing institutional clients?
Not really. Many providers operate both institutional and retail arms. We’re not trying to steal clients from partners. The market is huge. It’s more like different shops selling overlapping but not identical products. There’s some intersection, but it’s manageable.
What’s your go-to-market strategy? Sales-driven, IB-driven, or digital?
We lean towards a crypto-exchange-style model. If you have a good product, ambassadors, influencers, PR, and targeted marketing, it sells itself. We don’t want aggressive sales floors or questionable IB practices. Our standards are strict. The goal is a fully digital product, in the style of a US SaaS company. That’s who we look up to and model ourselves after.
Will crypto or CFDs be the main focus?
Crypto is more important in our model. There are roughly 150 million traditional traders globally, but crypto platforms already have over 300 million users. Institutional adoption is accelerating as well. The potential customer base for crypto is several times larger. Stocks are also important long term because there are over two billion equity investors worldwide.
Will the retail business stay under the same brand?
Yes. It’s simpler from a marketing, operational, and regulatory standpoint. We want to be transparent about having both retail and institutional businesses.
You have launched already. I appreciate it’s early days but has anything surprised you so far?
We didn’t even start marketing, yet within two weeks we had over 500 registrations due to brand recognition, which I did not expect.
We also realised how different retail support is. Institutional clients want to negotiate spreads and rebates. Retail clients ask so many questions. Can I trade with this platform? How can I deposit? Why did I not pass KYC instantly?
Are you considering adding event contracts?
No, our focus is on crypto, CFDs, and traditional asset classes. We don’t plan on offering event-style contracts.
What’s the long-term vision for the retail brand? Do you want to become a big player or if you end up being a mid-sized broker making consistent income, you’d be happy?
Well first of all, I was speaking recently to a US firm that we are trying to work with. They said, ‘Alex, we only have $75bn in assets under management.’ So it’s a matter of perspective – I think that’s pretty big but for them it wasn’t.
We definitely want to become a top-5 broker in terms of crypto. For me, my role model is being somewhere between StoneX and Charles Schwab. I admire those companies a lot but I also think we are trying to do something that takes the best parts of them and creates something new and different.
From the outside it looks like the B2BROKER group has really been trying to expand a lot in the last 18 months. What happened there internally? Has there been a concerted effort to put your foot on the gas, as it were?
About two years ago we brought in some consultants to help us with our next phase of growth. At the same time, we looked a lot at how US tech firms, SaaS-style companies, were able to scale and build. That was a really helpful process in laying down the foundations for growth – we really admire those tech companies internally.
From that we were able to put the foundations in place to do a lot of the work you described, like adding new features for B2PRIME, like going on this hiring spree in the institutional space. I remember that we had a board meeting and we said, ‘ok, now we are going to try and become a unicorn.’ So let’s hope we can do it.
