INTL FCStone 2013 Annual Report Download - page 4

Current Drivers of Our Strategy
The rapidly changing regulatory environment and customers’
desire to transact with well-capitalized counterparties has
made the nancial sector more capital-intensive and has
increased costs. This has resulted in industry consolidation, as
smaller players are driven out of the market and larger banks
are forced to deal with increased regulatory and capital
requirements to the detriment of smaller customers. We
believe we are uniquely placed to take advantage of these
industry trends.
We have developed a broad product capability, and the
regulatory status and global footprint to allow us to maximize
the opportunity to consolidate our strength as a mid-sized
industry player. This, in turn, allows us to take advantage of
both the consolidation of the lower end of the market and the
re-positioning of banks.
We are a leading independent clearing FCM (Futures
Commission Merchant), one of the few non-bank Swap
Dealers (registered under the recent Dodd-Frank legislation)
and a registered broker-dealer in the U.S. We have regulatory
authorizations for virtually all nancial services except
deposit-taking in the UK and Ireland, and have regulated
afliates in Brazil, Argentina, Dubai, Australia and Singapore.
Each of our businesses is volatile and their nancial
performance can change due to a variety of factors that
are both outside of management’s control and not readily
predictable. To address this volatility, we have diversied into
a number of uncorrelated products and businesses as well as
geographically.
Customers
We have more than 20,000 accounts representing
approximately 11,000 separate customers, located in more
than 100 countries, including producers, processors and
end-users of nearly all widely traded physical commodities;
commercial counterparties who are end-users of our
products and services; governmental and non-governmental
organizations; and commercial banks, brokers, institutional
investors and major investment banks. All of these customers
seek to mitigate nancial price-risk embedded in their
business processes, requiring efcient access to the capital
markets.
Over the last three years we have aggressively invested in
new growth markets in Asia, Europe, Australia, Latin America
and Canada, where we see opportunities to deliver our
services to mid-market customers that are not well-served
by local players. The opportunities for us vary from a need
by mid-sized commercial entities for more sophisticated
risk management as exposure to markets increases, to
emerging markets looking for more comprehensive access to
international futures and securities exchanges. Our customer-
centric approach tends to lead to long-term customer
relationships and annuity-like revenue for the Company.
Overview
INTL FCStone is an independent nancial services
rm employing nearly 1,100 professionals in eleven
countries. We focus on providing our commercial and
institutional customers with efcient access to the global
markets, enabling them to mitigate or gain from their market
exposures, efciently access liquidity, buy or sell physical
commodities and make global payments.
We execute and clear futures, options on futures, swaps,
securities, and foreign exchange in most global nancial
marketplaces, buy and sell physical commodities, and provide
a wide variety of services, including risk and corporate nance
advisory services and global payments. We act as an execution
broker and clearer, and in certain markets we may act as
a liquidity provider or offer customized risk-management
structures not available in the traded marketplace.
We are a customer-centric organization and tailor our
services to our customers’ requirements. These services
range from high-touch risk management advisory services,
including detailed proprietary market data and analytics, to
low-touch electronic and direct market access, including a
full range of post-trade support services.
Strategy
We focus on niche products and/or customer segments that
are generally overlooked or under-served by the larger
players in our industry, while offering a broad range of services
and capabilities in almost all markets and asset classes. This
strategy focuses on higher-margin activities, allowing us to
earn an appropriate return and attain a discernible franchise
status in these niche areas with an opportunity to leverage
these relationships into a broader product offering. We aim to
be recognized as a successful mid-size nancial services rm,
providing a wide range of nancial services to a high quality,
predominantly mid-market commercial and institutional
customer base.
We use a centralized and disciplined process for capital
allocation, risk management and cost control, while
delegating the execution of strategic objectives and day-
to-day management to experienced individuals. This
requires high-quality managers, a clear communication of
performance objectives and strong nancial and compliance
controls. We believe this strategy will enable us to build a
scalable and signicantly larger organization that embraces
an entrepreneurial approach to business, supported and
underpinned by strong central controls.
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3 2013 INTL FCStone Annual Report
Overview of Business
and Strategy