Velocity Clearing, a global financial services technology company, has entered into a Prime Brokerage services referral agreement with Raymond James Financial, a diversified financial services company.
Brian Schaeffer, President of Velocity Clearing, told Traders Magazine, the agreement remains in place for as long as both firms want it to be.
The agreement allows for Raymond James institutional sales and sales traders to introduce Velocity Prime Brokerage Services to their institutional client base of hedge funds and other professional fund managers.
Velocity’s prime brokerage offering includes core custody, clearance & settlement, financing and securities lending.
There are multiple reasons why this deal benefits Velocity, Schaeffer explained.
“This collaborative deal creates a win-win for both parties as Raymond James gets the benefit of having a best-in-class prime brokerage offering for thousands of its clients, while providing Velocity with an extensive sales team to promote Prime Brokerage and other services,” he said.
“Velocity’s target clients are in the sweet spot of Raymond James clients; producing real opportunities from start-up, emerging, and established private funds,” he added.
The agreement allows Raymond James’ institutional investors to custody assets directly with Velocity.
Schaeffer said that most of the custody of assets, including Prime Brokerage for Raymond James (RJ) clients, are housed elsewhere.
“Neither the “build” or “buy” seemed appropriate answer to solve their strategy,” he said.
After a lengthy due diligence process RJ chose Velocity because of its growth trajectory, current team leadership and its continued commitment and success in attracting senior industry talent, Schaeffer pointed out.
“With upwards of 200 technologists constantly improving the product offering through traditional and AI technologies was also a significant factor in their decision process,” he stressed.
In addition, the agreement allows RJ institutional investors to custody assets on an introduced basis with other clearing firms Velocity partners with.
Robert Kalaf, COO and Head of Prime Services at Velocity, said that self-clear vs introduced clearing has been around for a very long time in the industry.
There are varying reasons why firms choose to clear through others (balance sheet, service offering, client service, etc.), he said.
“While the referral arrangement can be, in its broadest sense, seem like a typical Introduced relationship, it is not. The Raymond James relationship is unique, and we plan to keep it that way for the foreseeable future,” he added.
“Velocity’s Prime Brokerage offering is a meaningful value-add option for our institutional client partnerships,” said David De Luca, Global Head of Equities for Raymond James. “We are impressed with Velocity’s differentiated and boutique client service model, its access to multiple balance sheets and product mix and the firm’s deep expertise in securities lending.”
Kalaf commented that the value proposition is multiple fold:
– Velocity’s white glove service approach, coupled with our ability to innovate through technology.
– Access to multiple balance sheets. Self-clearing capabilities and through our correspondents.
– Securities Lending Capabilities – with access to supply and competitive pricing generally reserved for the larger Primes.
– Capital Introduction & Consulting – through our partners as well as offering real deal consulting from senior members with “buy-side” to support clients in their growth potential.
– Prime Brokerage Content Library – bringing content and information for the industry, on the industry (securities lending, prime brokerage, and industry analytics).
– Execution Services – smart order routing for a multitude of products; cash, equities, options, futures, fixed income
When asked about other partnership agreements in the works, Schaeffer said that Velocity is always looking for strategic partners where appropriate.
“Whether it be technologies, clients or service provider driven. As example, our expansion into Latin America where we have boots on the ground and are excited about partnerships with the BIVA exchange,” he said.
