The newly rebranded Mirae Asset Securities (USA) has made significant progress with the help of its South Korean parent. Members of the US senior management team discuss how the new entrant to the global prime brokerage, securities lending, repo and correspondent clearing businesses has fared. Drew Nicol reports
Why did Daewoo Securities (America) become Mirae Asset Securities (USA) in October 2016?
Peter Volino: Daewoo Securities (America) was acquired by Mirae Asset Financial Group as part of its global diversification strategy and to extend its asset management and brokerage businesses into the global prime brokerage, securities lending, repo and correspondent clearing businesses.
These businesses will be in addition to the New York firm’s foreign research distribution and agency execution businesses, which will also be expanded.
Can you tell us more about the Mirae Asset Financial Group?
Richard Misiano: Mirae Asset Financial Group is South Korea’s leading financial services firm. As of 31 December 2016, the group’s asset management business had $90 billion in assets under management, while its wealth management franchise included $179 billion of assets.
Mirae Asset Financial Group’s various broker-dealer subsidiaries and affiliates have approximately $5.8 billion in capital.
The group has a track record of successfully building businesses both inside and outside of South Korea.
It is currently in 15 markets including the US, UK, China, Hong Kong, India and Brazil. Mirae Asset Securities (USA) clients will now also benefit from the research coverage that the parent maintains for more than 1,000 public companies in South Korea, China, Vietnam, Indonesia and Brazil. Mirae Asset Securities clients will have access to meetings in New York with ‘C’ level executives from certain of these public companies, as well as meetings with American executives.
Mirae Asset Securities, strategically, is a logical extension of the formidable asset management and brokerage franchise created by the parent over the last 20 years in the wake of the Asian financial crisis.
We also have a presence in India, Indonesia, Australia and Singapore.
How has Mirae Asset Securities (USA) pursued its growth strategy since the acquisition last year?
Robert Akeson: Since the group concluded the acquisition, there have been several major developments to our services.
We have received a significant capital infusion from our parent—as of 31 January 2017, we had approximately $260 million of total net capital.
Mirae Asset Securities also received approval from the US Financial Industry Regulatory Authority to provide several services in the US, including securities lending, repo, prime brokerage and correspondent clearing.
It is also able to offer agency execution and buy-side trading, foreign research distribution, and corporate access.
In addition, Mirae Asset Securities (USA) is currently working with central counterparties and clearinghouses, such as DTCC, the National Securities Clearing Corporation, the Fixed Income Clearing Corporation and OCC, to establish memberships.
Furthermore, we are working with FIS, a $30 billion market cap public company and leader in the information services arena, to develop a customised leading edge, fully integrated back-office and front-end for hedge fund clients.
We expect to begin certain brokerage activities during Q2 2017.
With these new licences and memberships, who are your target clients?
Misiano: As we have a global scope and are well capitalised, the Mirae Asset Securities (USA) offering will target clients that transact in the equity, fixed income and options markets.
Our prime brokerage business clients are the emerging and small managers. They are the most affected by industry consolidation due to Basel III and the US Dodd-Frank Act.
We are also open to larger funds that are seeking a significant and attentive counterparty for their secondary prime brokerage relationships.
In terms of our global finance business clients, we will primarily work with sovereign wealth funds, insurance companies, along with other lenders and broker-dealers.
We are also able to service money market mutual funds, proprietary traders and real estate investment funds.
For our clearing business clients, institutional brokers that support hedge funds and proprietary traders.
Those are quite crowded markets. How will Mirae Asset Securities (USA) differentiate itself?
Volino: What is very exciting is that Mirae Asset Securities (USA) has the resources and reach of a significant global firm, but will provide high touch, boutique services for clients—similar to what Furman Selz and Neuberger Berman once did.
No other firm occupies this very important role. For example, we are not owned by a bank holding company and, therefore, are not directly subject to Basel III, while we also possess a significant balance sheet.
We have the technology and service model to support emerging and smaller managers.
These managers, because of their size, tend to be more nimble and focused from an investment strategy standpoint, which can result in them outperforming their larger competitors.
The parent of Mirae Asset Securities (USA) is an active investor in these alternative investment vehicles in South Korea and expects to be doing the same in other markets.
However, because of their size, many emerging and smaller may lack the resources and knowhow to properly manage their business risk—they can be overwhelmed by the complexity.
To help these managers better manage such risk, Mirae Asset Securities (USA) is partnering with leading technology companies, such as FIS, to provide a comprehensive, fully integrated technology platform for managers.
The Mirae Asset Securities (USA) prime brokerage platform will offer tailored solutions such as robust portfolio reporting and analytics, risk management, trading with global market access, and research.
The platform will have a large focus on supplying intelligent data to support our clients strategies.
We will also provide a host of advisory services that will assist clients in navigating through the mazes that are the office space, enterprise technology, cyber security, compliance and human resources and sectors.
Our primary goal is to, as much as possible, free managers up to do what they do best—to run money.
