Interview with John William Gunn: Founder of Global Investment Strategy (GIS)

With a new overseas office planned for Dubai this year, we thought now would be an interesting time to interview John William Gunn, the founder of brokerage Global Investment Strategy Ltd (GIS). The company was founded back in 2004 and continues to go from strength to strength. This interview gives an insight into John Gunn’s early years, the crucial broker/client relationship, his view on changing markets and plans for the future.

How did you get started in stockbroking?

I joined the securities industry in 1987, a couple of months before Black Monday, the severe and largely unexpected stock market crash in October 1987. My first role was with Hoare Govett as an operation clerk handling private client ledgers. 

Since founding Global Investment Strategy, how has the company grown, and what plans do you have for the future?

I founded GIS as I saw a gap in the market to offer smaller professional clients services that were typically exclusive to the larger hedge funds and family offices, provided by the Tier 1 investment banks. It has taken us a decade to reach where we are now, with counterparts in every major market and at least a dozen emerging and frontier markets. 

Today we have an impressive position within global markets, continuing our growth in the Asian markets with further expansion in the Middle East. Our services cover global equities and bonds as well as CFDs, Derivatives, FX and payment services. We offer 24/5 operating coverage through our offices in London, Mumbai, and Hong Kong and will look to open an office in Dubai this year. 

What is your typical client profile?

Our typical client is a small to medium-size hedge fund, regulated broker-dealer, proprietary trading enterprise and family office. We also have a wealth management division for HNW clients and payment services to support our corporate clients. 

How do you maintain the traditional client/broker relationship?

Relationships with clients build over time, with trust, service levels and integrity as the foundations. In such a competitive market where technology has placed pressure on margins, you have to be dynamic in the valuation creation you can offer your clients. 

Clients often need more support than just competitive pricing. We work with them to help build their business, manage their operational risks, and reduce back-office operation costs. However, settlement and reporting efficiencies are a valuable proposition, areas where we believe we have a unique advantage over our larger competitors. 

How do you manage to maintain a competitive charging structure?

We maintain a competitive pricing structure through building strong counterpart relationships. This allows us to maintain a regular flow of business and negotiate pricing that we can pass on to our clients. Our membership of the CREST clearing network and member firm status with the London Stock Exchange allows us to offer competitive custody services. 

How do you ensure that client assets are safe with overseas custodians?

GIS is regulated in the UK by the FCA and Hong Kong by the SFC, where it is permissioned to hold/safeguard client money and assets. Today we hold custody accounts with CREST, the central securities depository for markets in the United Kingdom and operated by Euroclear. We also have custody accounts with some of the largest financial institutions in the world and adhere to strict regulatory guidelines concerning our treatment of client assets. 

We hold our client money in segregated trust status accounts with major global banks. GIS does not offer traditional banking services and therefore does not rehypothecate clients' funds. All client money and assets are held securely, and clients can take comfort that today GIS have been entrusted to hold $1 billion of custodied assets. 

How do you cope with increasing regulatory obligations?

Regulation is a challenge for all market participants. However, it is something we all need to embrace if we are to establish a level playing field for regulated entities and safeguard the interests of our clients and consumers, who rely on our integrity. Accordingly, GIS has invested in a team of excellent and knowledgeable professionals to manage our compliance. 

We have recently recruited additional legal and compliance personnel to help us expand into new products and markets. We further have the support of external compliance advisor Bovill, which provides us with expert compliance support for both our UK and Hong Kong businesses. 

What role do you see for FinTech moving forward?

We have invested in technology and communications that enable our clients to communicate with us on an encrypted platform, extracting trade reports and valuations. They can also pass trade queries and even transactions, avoiding expensive platforms, which can be a burdensome cost for start-up funds. 

Looking forward, we believe that blockchains and smart contracts have not yet been fully utilised from an institutional perspective. The opportunity for instant settlement of transactions and equity proxy voting through smart contracts would help ease a lot of 'friction' in traditional financial markets.

Which frontier markets do you see emerging in the future?

India and Taiwan will be among the beneficiaries of the growing desire from the buy-side to trade on swap rather than cash. This setup allows Hedge Funds and Long Only Funds to trade in markets that were previously only accessible after completing the complicated process of obtaining local IDs and approvals.

Cryptocurrencies are popular; do you believe they will be regulated at some point?

Increased regulation for cryptocurrencies is inevitable, with Treasury Secretary Janet Yellen noting that the recent $18B collapse of algorithmic stablecoin TerraUSD (UST) posed a similar risk to retail investors as an old fashioned bank run. In addition, US authorities have previously mentioned that stablecoins are a 'key gap' in current regulations, whilst Dubai has continued to strengthen its case as a haven for crypto firms, through its virtual asset license initiatives.

What changes do you expect to impact the industry in the next decade?

I think our industry and regulators will be under pressure to deal with the ever-growing Crypto and DEFI markets in the next decade. There are many challenges to overcome to provide a safe environment for the consumer to invest in. We also need to protect market participants that have invested in the regulation and the safeguards that this framework brings. 

If this can be achieved, there could be a possible repetition of the Dotcom boom of the 1990’s as businesses built on these decentralised platforms move into the mainstream. Naturally, many will look to access capital from the traditional listed equity and bond markets. 

Disclaimer: Users of this website should seek independent financial advice prior to making any investment decision and no information herein shall constitute general or specific investment advice of any kind.

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