Pello Capital – Bringing technology to the stockbroking sector
Since rebranding at the beginning of the year, stockbroker Pello Capital has continued its long-term focus on technology in the investment space. Here, chief executive Daniel Gee, part of the senior management team that came onboard in Q4 2017 when Pello was known as Cornhill, argues that the firm is not necessarily attempting to re-invent the wheel. Instead, the trader and programmer says that the innovative use of technology can simply be used to make the long-outdated brokerage model more effective for investment and corporate clients alike.
Investor services
Under its new guise, Pello has continued to offer a range of both popular and more esoteric investment products for retail and institutional clients alike. Indeed, it has more than 2,000 clients and over £75m in assets under management.
On the retail side, this includes tax-efficient Stocks and Shares ISAs for clients that wish to execute transactions up to the value of £20,000 without any investment guidance. Likewise, the business also offers Self Invested Personal Pensions for those who want to invest their retirement savings themselves in a tax-efficient manner. These products typically allow users to put money into a much broader – if often riskier – range of products than are generally available in personal pensions and group personal pensions.
Elsewhere, Pello offers more traditional general investment accounts to individual clients of all sizes and experiences as well as small and medium-sized businesses and financial firms. It provides a variety of services in this area, including execution-only, stock picking, and wealth management. Moving up the ladder, the business also offers investment services specialising in CFDs and spread betting, foreign currency, corporate bonds, and gilts, and share dealing.
Although many stockbrokers offer these sorts of services, Gee says that one of the things setting Pello apart from its peers is its forward-thinking approach to compliance:
‘We are one of the first corporate brokers to use artificial intelligence for compliance oversight. This may go further than we need do from a regulatory perspective, but we want to be the gold standard and want to be setting the pace,’ he says. ‘For too long, this industry has been trailing behind because no one has stepped out of line, no one has done anything new, no one has been disruptive. We think that by stepping out of line, we can ensure that consumers get access to some more exciting products.’
Unique products
As well as the more traditional investments listed above, Pello also boasts specialist in-house traders that can provide eligible clients with access to instruments like derivatives, structured products, and high-yield debt.
Likewise, Gee says the business can harness its relationships with companies and individuals across the City to provide clients with access to IPOs and placings that not always available to all market investors. This could be anything from an AIM or ISX-listed business to a larger company on the FTSE All-Share, FTSE 250, or FTSE 100. The company can give its clients the chance to take advantage of these opportunities at the same price as large financial institutions.
Gee says the business is also developing technology that allows the firm to tailor the way it pitches its opportunities in this area, ensuring it always highlights the most relevant placings to clients:
‘In the old days, we had a team of stockbrokers who would pick up the phone and sell products to clients. We still have that, but we are also able to map analytics and mine our own data to give us the best idea of what sort of stocks each client tends to be interested – in essence, a method of pre-screening. This both cuts down the amount of time it takes for our brokers to sell and ensures that the more customers trade with us, the better we can serve them.’
Corporate broking
Elsewhere, Pello also offers corporate clients tailored assistance to their financing requirements. The organisation has raised capital for more than 100 companies as either lead or co-broker with a focus on raising between £1m-£30m in value across either debt or equity. Through this experience, it has developed an investment process that includes thorough due diligence to ensure investors can have confidence in the companies that it represents. It also works with numerous City law firms, NOMADS, and accountants who assist in both the listing and structuring process for each raise. Meanwhile, in terms of fees, Pello offers its clients a tiered annual retainer that grows as they do and a fixed rate of commission that does not change with prevailing market conditions.
Alongside these more traditional services, Gee says the firm is working on using technology to increase liquidity in the corporate broking space. This includes the imminent release of what the firm believes to be the first-ever corporate broking app and a personal Spotlight terminal that allows them to host content and deliver feedback and analytics in real-time. Gee explains:
‘Transparency gets poorer and poorer as you go down the market towards small-cap. So, what we have done is created a real-time dynamic window into our trading floor for our corporate clients. What that means is that when we are going to fundraise for our customers, they can log in to their terminal and can see in real-time where their progress is in that transaction. This can help to make decisions as the fundraising goes along. It is all about keeping the client in the loop.’
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