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ThinkLiquidity expands to the corporate sector
The risk management firm will help corporations with international currency risks.
ThinkLiquidity, a Grand Rapids-based risk management and technology firm, recently launched a new business unit expanding the team’s expertise in risk management from brokerage firms to the corporate sector to help businesses improve their foreign currency and commodity hedging strategy and execution.
Jeff Wilkins, managing director at ThinkLiquidity, said up until last year the company focused on providing risk management and technology services to foreign exchange brokers throughout the world, including Australia, Malaysia, Hong Kong, London and Singapore, among others.
“We are diversifying our offering, and our new customers we’ll be bringing on will be large corporations that have international currency risks,” said Wilkins. “We are going to focus on, of course, our existing businesses, but also looking to help out corporates — looking to help out treasury teams within those corporates to enhance their strategies.”
The company provides a number of tools and resources measuring execution quality and efficacy for corporate hedging programs, which results in greater visibility for financial officers and treasury department teams, according to a press release.
“There is really a systematic issue across corporates in terms of execution and really the cost of execution they are not recognizing,” said Wilkins.
“Most of their focus is figuring out what to hedge, but the actual hedging becomes an after-thought, and banks have done a really good job at inflating the prices in which they execute. There is a tremendous cost-savings that can be introduced with us in the mix.”
Since there is not typically a line item for hedge execution costs, Wilkins said it can result in companies being unaware of the true cost they are paying.
“The saying ‘what gets measured gets improved’ is relevant in this context,” said Wilkins. “Fiduciaries for retirement plans have been tracking execution costs for years; it’s easy for exchange traded products. CFOs and treasury departments seeking the same clarity on foreign exchange transactions have a harder time.”
ThinkLiquidity originally focused on supporting OTC, retail and institutional brokers to identify and reduce the cost of execution on foreign exchange. Now in its fourth year of operation, the company is expanding its customer base to help companies navigate market volatility, hedge timing, undisclosed fees associated with foreign exchange trading and strategy selection.
“Our focus has been working with brokers, optimizing their risk management, and it is easy for us to manage it for corporations because of the reduced number of volume compared to our brokerage customers,” said Wilkins. “The amount of money we can save them is equally as high as the broker side.”
ThinkLiquidity’s solutions also comprise an in-house-developed MetaTrader 4 Bridge and Risk Engine, an MT4 Multi-Account Manager platform, a tiered and customizable web-based analytics suite and consulting services. Nearly 4 million transactions totaling more than $250 billion are measured each month on ThinkLiquidity’s platform to identify execution markup for companies, according to the press release.
“In our industry we have competitors on the technology side and we have competitors on the risk management side, but there is nobody that does both,” said Wilkins. “We have really carved out a nice niche and have been able to grow.”
The company has three offices and employs a staff of 25.
“We have extremely talented people. (They) care deeply about the business and they care deeply about our customers,” said Wilkins.
As the company moves into the corporate treasury world, Wilkins said the challenge is the companies that have international currency exposure tend to be larger and move a little bit slower.
“We are ready for that challenge. We know it will be a longer cycle for us, but we are OK with that because we want to make sure our customers are comfortable in terms of working with us,” said Wilkins.
“I think the opportunities are endless because of the cost savings. Every single company out there that has international currency exposures would benefit from having us as part of their team. It really is a huge value-add.”