Getting to know Henyep

Publication date: 3 February 2012
Author: Steve Shaw, Editor, FX-MM

Tagged with: Cover Interviews, Henyep Group, Marios Chailis, Middle East, Steve Shaw

Although not a household name in Europe, the Henyep Group is very well known in both Asia and the Middle East and has been operating in the financial services industry for over 35 years. Steve Shaw talks to Marios Chailis, Henyep’s Group Marketing Director, about their business, the operating environment and regulatory outlook in the markets in which they operate.

Marios Chailis, a Cypriot, is an engaging fellow with strong opinions on many things which are happening in the markets and the forex industry in general. Chailis, a 12 year internet marketing veteran, specializing in e-commerce and online marketing, was hired by Henyep five years ago to help the group develop their online marketing and retail client acquisition thrust. Prior to joining Henyep he had been working as the marketing manager at Easy Forex for several years, where he helped create the online marketing function and structure the overall marketing strategy. He has also worked in other fast paced industries revolving around the internet and e-commerce, spending several years with notable companies such as Playtech and Empire Online.

Henyep has its roots in Asia and has been around for a long time. The name is Chinese and literally means “Prosperity Forever”. Henyep Development Holdings was founded in Hong Kong back in the mid 1970s as a commodities trading business, making it one of the oldest financial services companies in Hong Kong.

FSA-regulated Henyep Capital Markets was established in London in 1994. It was particularly important for Henyep to establish a UK company because it meant coming under the regulatory jurisdiction of the FSA, with its focus on integrity, transparency and compliance, all of which were, and still are, key priorities for Henyep.

Today the Group still has its global headquarters in Hong Kong and its activities span finance, property, education and charity. Its capital markets activities include trading, brokerage, IPOs, underwriting, Mezzanine Financing and various business development initiatives with particular focus on the Greater Asia region.

Chailis is mostly based out of Henyep’s offices in Dubai. Already well-established in Hong Kong and London it was important for Henyep to establish a physical presence in the UAE from which it could serve its clients across the Middle East. Chailis explains: “it takes time to understand the regional regulatory environment and the culture in the Middle East. The local regulatory body, the DFSA, was established just a few years ago and prior to that there was no clear path for brokers who wanted to establish regulated entities in the region. Henyep Investment Bank was granted a full licence in Dubai in 2006 making it the first UK-based specialist foreign exchange and derivatives trading firm to be granted a license by the DFSA. We have since worked very hard on our compliance and operations in Dubai and have managed to become the only forex company to receive a full retail endorsement by the DFSA, which is a huge achievement.”

Dubai of course went through a difficult period in 2008 and 2009. Says Chailis: “Dubai became the posterchild for the impact of the global financial crisis although in the end it only needed a $10 billion bailout for its debt restructuring. Compare this with the $300 billion needed by Greece or the bailouts that some of the US banks received and you can see how this was greatly overblown. The situation in Dubai was made to look much worse than it really was. Abu Dhabi quickly put up the money to support Dubai but the international media coverage of Dubai’s problems continued being greatly exaggerated. The bad press had a negative impact on the UAE’s image as a whole, not just Dubai’s. The real estate sector in Dubai certainly took a big hit and prices suffered a major correction after several years of big rises, but outside of the property sector business went on pretty much as usual. The mood here is much brighter again now. Foreign investors have now returned, transactions are happening again and the retail, tourism and logistics sectors all recovered some time ago.”

The global financial turmoil created new business opportunities for Henyep in the Middle East as partners wanted to eliminate any uncertainty and showed preference for working with companies that have an on the ground presence in the region. Chailis says: “we have had partnerships with leading financial institutions in the region for more than 25 years but it still makes a big difference to clients if you have a local presence. Through establishing our operation in the Dubai International Financial Centre we have been able to capitalise on a number of new opportunities. In recent months the ongoing unrest in several parts of the Middle East arising from the “Arab Spring” has also resulted in new business coming into the UAE. Foreign companies operating in some of the more volatile parts of the region have been scaling down their business operations in these countries and moving them to the UAE. They view the UAE as an oasis of calm and stability, as it has not been affected to any great extent by the events elsewhere in the region.”

For Henyep more IPO activity in the global FX trading industry is welcome. Chailis is encouraged by the actions of companies such as FXCM and Gain Capital to seek to go public. He says: “it gives more assurance to clients. We need more companies in the sector going public as it will bring greater transparency to the industry and will open up the market in terms of making it accessible to more people. M & A activity in the industry is also a good sign. It should help to clear the landscape of unregulated companies which don’t follow the rules and drag down the reputation of the whole industry. Companies which follow unethical business practices should be rooted out and fewer, but better, companies will remain in the sector which will be good news for everybody. In the last few years there was an influx of new forex brokers popping up as eCommerce businesses and gaming operators are trying to cash in on FX – they’re not FX specialists, with no financial services experience or real industry knowledge but are attracted by the business model even though they don’t understand it quite well.”

Although Henyep has over 400 people across its offices in Hong Kong, Dubai and London, Chailis concedes that while the Henyep name is well-known in industry circles and considered a leader, it is not a household name in the retail market, saying: “Henyep Capital Markets operates under three separate retail brands, HY Markets, PIPTRADE and HY Investment, and we have hitherto placed a lot of emphasis on whitelabelling our systems, platform and back office to a number of carefully selected partners and affiliates in various jurisdictions. Perhaps this white-labelling approach has meant that the Henyep brand is not yet as well-known as it might otherwise have been – clients may not see the Henyep name on their internet browser or Henyep logos flashing across their TV screens advertising on CNBC but we are there, standing right behind our partners. We do a lot of hand-holding, helping our partners to navigate any regulatory and technology issues. We also provide extensive product training as it’s very important that our partners know how to use the platforms we provide. We derive a lot of our business though our partners and they certainly appreciate the investment that we make in education, training and support. Going forward we have reached a decision where we intend to publicise the Henyep name more widely.”

Turning to Henyep’s business activities in the Asia-Pacific region and beyond, Chailis says: “we’re a company that’s deeply rooted in Asia and we have clients all over the region. We’re not just an FX company of course. We also offer precious metals, commodities, equities, energy products and index trading, but the key thing is that wherever we operate we ensure that we fully understand the local market in terms of regulatory requirements and client needs. China, for example, is a very controlled environment and clients there love to trade local stocks. They don’t care so much for trading US stocks or indices like clients do in other markets, so we have tailored our product offering there to feature more of the products that local clients really want. This is something we try to do in all our markets in order to make our offering more appealing and relevant. We have long had a presence in Hong Kong, where we operate as a more “traditional” financial institution. We are currently holding two trading rights at the Stock Exchange of Hong Kong (SEHK), where we provide stock-broking services to our local and overseas clients. The Henyep Group has a strong track record of involvement in fundraising campaigns and has helped raise millions of dollars for the benefit of a number of established charities and foundations. Our most significant involvements are with the Sheen Hok Charitable Foundation and Operation Smile across Hong Kong, Greater China and internationally.”

In the rest of Asia Henyep’s general approach is to operate through a network of good quality, locallybased, regulated partners. In Japan, Singapore and Taiwan for example they have partners who are whitelabelling their platforms. They currently have no physical presence in India, something which they hope to address, but have a lot of expatriate Indian clients. Chailis adds: “we’re also looking at Turkey and expect to have a presence there as soon as the new regulatory framework is introduced. We’re also looking at opportunities in Russia and are currently trying to get a better understanding of what Russian clients expect from a broker so that we can customize our offering in order to be competitive. We’ve already made several hires and have already started work on our IT and network infrastructure there so that we can offer clients a secure, fast and reliable trading experience. There is currently no FX regulatory body in Russia and until there is our approach will be to follow FSA regulations as a standard, in order to protect our brand and our reputation.”

Turning to the global regulatory environment Chailis says: “as we’re a pretty diverse group in terms of both geography and products traded and operate multiple regulated entities we have a lot of compliance staff working for the group across our various offices. Our view is that better industry regulation is always welcome. It is my personal view though that in the US some of the recent regulatory changes seem to have been made in haste. Although Henyep does not take on any US business, I view some of the recent regulatory developments there as increasing the risk of choking US-regulated businesses and driving US brokers to move their operations to other jurisdictions in order to circumvent the onerous regulatory regime. More transparency is a good thing but the regulators there need to strike the right balance, avoiding overregulation of the industry as this could have the effect of strangling good businesses.”

Chailis is somewhat reluctant to disclose too much detail about Henyep’s future plans but says “these will certainly involve more visibility for the Henyep brands, expansion into even more new markets, either in our own right or through partnerships with quality financial institutions, and PIPTRADE, our bespoke spread-trading division, has some exciting developments in the pipeline.”