Commodity broker of the year: BPI Financial Group

Energy Risk Asia Awards 2021

ERAA21-Winner-web

BPI Financial Group’s meteoric rise to success has boosted it from Newcomer of the year in 2020 to Commodity broker of the year at the Energy Risk Asia Awards 2021. BPI Financial Group’s senior management shares the firm’s winning formula in creating value for its clients and its future expansion plans

BPI Financial Group cut its teeth as a relatively new broker in 2020 amid unprecedented levels of market volatility, edging its way to the top of the leaderboard. 2021 was the year it consolidated its success and pushed ahead with expansion plans in new products, services and geographies. 

Kenny Mah, BPI Financial Group
Kenny Mah, BPI Financial Group

Kenny Mah, group chief executive at BPI Financial Group, says: “We didn’t think it was necessarily going to be an easy journey for us, but we have strong stakeholders and a growing client base. This award vindicates the value we have created for our clients and stakeholders. The volatility helped us offer our services across global markets covering well over 80 derivatives products to our customers.

“We also have a unique ability to seamlessly connect different markets – the West, Asia and emerging markets within China. Our clients recognise the value we bring to the table, which has helped us grow from a newcomer to Commodity broker of the year.”

BPI Financial Group increased its customer funds by 65% year-on-year and solidified its presence after last year’s record-breaking surge in volatility. It markets itself as a one-stop shop that offers over-the-counter (OTC) broking across a range of commodities, including bulk commodities, base and precious metals, multi-asset global markets trading access and clearing services, and facilitation of trading in precious metals. 

BPI Financial Group onboarded a team in late 2019 to help deepen its capability in precious metals, connecting Asian producers to global consumers by creating value in physical trade facilitation. Notwithstanding barriers induced by the Covid‑19 pandemic, the precious metals team made significant progress during the year with its trade facilitation volumes ranking among the highest in precious metals in Hong Kong. 

The group’s key business leaders have years of sell-side experience, which has helped shape a formidable culture, with a focus on hand-holding clients through the onboarding process, educating them about the benefits of hedging and then tailoring the right solutions for their needs. It credits this triumvirate structure for its continued success with customers. 

Fan Songhua, BPI Financial Group
Fan Songhua, BPI Financial Group

Fan Songhua, chief commercial officer at BPI Financial Group, says: “I think we have cultivated a culture where we’ve giving salespeople the latitude and time to grow and groom customers. We have consciously encouraged them to spend a considerable amount of time building out our clientele. 

“Some of our clients never considered hedging previously, deeming it to be risky for lack of know-how. It is scenarios like these where we have helped create value for our clients. We believe that through such hand-holding we have cultivated that relationship, trust and rapport for the long term, and therein lies our ability to differentiate in this heavily commoditised market.”

Strong demand for commodities including power generation fuels and coal – which hit record price highs in September – are also fuelling BPI Financial Group’s rapid growth. It entered the coal derivatives space in November 2020 with a bang. Songhua says: “By leveraging our existing network and also working with a new client base, within about six months we have become the dominant provider both in broking and clearing in coal derivatives.”

Another key dimension that sets BPI Financial Group apart is its ability to provide seamless low-latency access into multiple markets. This allows its buy-side clients multiple trading opportunities, including flexibility across diverse trade strategies during volatile markets. Mah explains: “Critically, for us as a clearing firm, risk management is of utmost importance. Positioning yourself directionally can be quite disastrous if the market moves against you, but being able to trade spreads massively reduces risk.

“Spreads can be traded in multiple ways across different expiries, different venues and across different but related products. We’ve seen a lot more opportunities in arbitrage trading strategies over the past 12 months.”

Earlier this year, BPI Financial Group launched a team of brokers in Shanghai offering renminbi-denominated iron ore swaps to target physical traders in the iron ore space that need to hedge their procurement and sales. Building on its success, the team has expanded both in size and in terms of products to also focus on renminbi-denominated steel products.

The next milestone for BPI Financial Group is a bigger geographical footprint. Now that the firm is well established in Singapore, Hong Kong and mainland China, it is turning its sights to Europe. Mah says: “Our ambition has always been and continues to be our ability to connect western and eastern trade flows, both physical and financial. To this end, we are onboarding an experienced team, starting in 2022. The purpose of the team is twofold. 

“The first is to focus on the physical market, including fundraising for mining projects. It is getting tougher to get banks to finance those projects so we have experienced veterans that specialise in soliciting funding for commodity players. They are very savvy and experienced in physical brokerage. The second focus is to develop local presence in Europe, offering broking in OTC products and also extend our clearing capability into western markets.”

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