BOOM, the online securities company has revealed that it is to start a professional services division. The division will make use of the firm's extensive back office software platform which has taken 40 people four years to build.
The new division will sell its services to retail banks, brokerages and independent financial advisers throughout the region which do not have the scale to build their own, internationally capable back office functions.
The new division will be able to offer local and international order execution, sub-accounting and custodial services through a range of different accounts. The first account that clients can choose will be an agency relationship account where the banks will agree to outsource all their clients' brokerage back office needs to BOOM which will then pass back all the revenues received from the clients. BOOM in turn will get a percentage of the total revenues derived from each client.
The second possible account will be an international clearing account where local brokerages which do not have international capabilities can link up with BOOM which will provide the full range of order execution, accounting and custody services in the 10 markets in which it operates.
BOOM recently announced that it was expanding out from Hong Kong and that investors could now trade equities in 10 countries and 15 exchanges around Asia and the world. All local banks and brokerages in the countries where it now operates can take advantage of this new international back office functionality. The 10 countries BOOM is present in are Australia, China, Hong Kong, Japan, Korea, the Philippines, Singapore, Taiwan, Thailand, and the US.
The third account possibility will be what BOOM calls an optimized account, where essentially BOOM will merge its back office systems with those of the client to provide a seamless and realtime trading and settlement platform for them to use.
BOOM will also announce today that it has secured its first client for this deal, Banco Nacional Ultramarino - the second largest bank in Macau - which will be setting up an agency relationship with BOOM. The company has also revealed that it is in deep discussions with two other banks for the optimized account relationship.
Key to the thinking behind the move is that BOOM presently operates its back office systems at around only 20% of their potential capacity. Its retail stockbroking business, while strong, does not match the capabilities of its own back office systems. By opening its back office to third parties, the company hopes to generate significant costs savings to its clients and revenue benefits for itself.
"This is a turnkey solution for all financial intermediaries," explains Mark Duff, CEO of BOOM.
BOOM started life in 1997 as the first online stockbroker in Hong Kong. Its shareholders include ANZ, OCBC, the Eu Family from Hong Kong and two established Silicon Valley investors. BOOM is an acronym meaning beyond other ordinary markets - or perhaps now it could be back office order machine.