The Ethical Approach: Interview with ICC Group CEO Panikos Teklos
By Artemis Constantinidou
You have recently been appointed as the CEO of ICC Intercertus, Axios and Pen Hill Wealth Advisors. As an established professional with extensive experience in the financial services industry, what are your personal goals and what is it that you are hoping to achieve in this new role?
Undertaking the responsibility to run three interconnected Groups has provided me with the opportunity to bring “disruption” not only on the business front but also on the human capital, CSR and ESG fronts. Therefore, from a personal goals perspective, my objective is to transform these Groups into role-model, forward-looking organisations with the aim of excelling at a global level. The keyword, and common denominator, that characterizes all three groups is “ethical”. This translates to being ethical towards our clients, towards our counterparties and business partners, towards our practices, towards our employees and towards our communities and broader society. Being ethical naturally ties in very well with the core values of integrity and transparency that we represent.
I hugely embrace ‘out-of-the box’ thinking as well as ‘thinking big! We thus strongly encourage our people to brainstorm and innovate and we invest substantially in our talent acquisition and retention. We also strive to develop trend-setting initiatives and offer best-of-breed solutions and products to our clients. This is the outcome of tangibly recognizing that our human capital and our clients are our most valuable assets.
Which companies does the group structure entail and what are the operations of each one?
From an operational and structural perspective, there are in principle three distinct Groups, which are interconnected through their shareholders. The first Group is ICC Intercertus, made up of various licensed entities behind our online brokerage brand Axiance. The second is Axios, which mainly consists of our electronic payments operations under the Big Wallet brand, and last but not least is our Pen Hill Wealth Advisors Group, a boutique wealth advisory firm. Axiance focuses on delivering multi-asset brokerage-type services with an initial offering on CFD products whilst transiting into the addition of various other assets and portfolio management services. Big Wallet offers payment gateway services and also carries a Payment Institution licence from the Central Bank of Cyprus as well as an Electronic Money Institution licence from the Central Bank of Lithuania. Pen Hill is the private office of the principals whilst it also provides investment consulting for family offices, HNWIs and select corporates with a focus on the Middle East, CIS, Greece and Cyprus.
Axiance is described as ‘A modern-day broker for a new generation of traders’. What exactly does the new generation of traders look for when engaging in trading transactions and how does the modern-day brokerage firm respond to these needs?
We are looking at a market consisting mainly of millennials and GenZs, and what they both have in common is tech-savviness, they demand transparency, they share an interest in consuming and investing responsibly, and they have an above average knowledge of blockchain, artificial intelligence and online media. This is a mix of trends and factors that we are reflecting in our investment products, our technology and our communications. Staying in tune with your times is essential to staying relevant and Axiance is a brand that echoes these generational trends.
What are the benefits derived from the transformation from offering CFD trading to becoming a multi-asset brokerage brand?
From the combination of customer expectations and the rise in different trading applications, there emerged a need to be able to provide access to a plethora of financial assets on a broker’s platform. Catering to all levels of sophistication for retail and professional clients, by providing a diversified product offering, has become essential. In addition, on the traders’ side, the destabilizing factor of global economic and political shocks has exponentially grown, which calls for a sound diversification in their investment strategies. A multi-asset model allows investors to mitigate risk, capitalise on market volatility and deploy strategies like hedging or tactical asset allocation. Last but not least, it is highly acknowledged and endorsed by regulators, which feel much more comfortable with the addition of non-leveraged instruments.
What is the significance of CSR and ESG practices in today’s corporate world and how does the Group incorporate these through its daily operations?
While CSR should remain at the core of any organisation, ESG takes it a step further and the degree of impact is much greater, thanks to a total rethinking of your approach at both service and entity level. As a modern business, you will outline new ways to reduce your organisation’s impact on the environment and society, to improve the well-being of your employees and rethink your service offering in ways that create value for all stakeholders. In practice, all three Groups started by emphasizing risk management, empowering our clients with enough investment knowledge, reducing carbon emissions on our premises through the use of solar energy, offering more training and development and helping local communities deal with the impact of the pandemic. And this is only the start; besides our many initiatives, we are implementing long-term practices, an inherent quality of ESG.
What steps does the Group take in order to ensure compliance, transparency and investor protection?
First of all, let me point out that Cyprus has emerged as a trusted jurisdiction for online trading, mostly due to the diligent work done by CySEC. Our Group gathers professionals and subject matter experts from a wide range of fields, but their training and upskilling never stops, as we want to make sure that our risk & compliance teams are always well aware of current regulatory frameworks and have much more than the necessary skills to ensure the Group’s requirements. We foster an environment of continuous professional development to enable our people to successfully navigate the complexities of the industry, hence we are constantly onboarding cutting-edge solutions such as Artificial Intelligence and Machine Learning that support our working professionals while, at the same time, protecting our clients.
To achieve the above, the Group blends the knowledge of our talented SMEs with cutting-edge technology, specialized seminars and webinars, and best market practices, to provide a seamless experience to our clients while, at the same time, fulfilling the various regulatory requirements. In this way, we provide hands-on solutions for our working professionals to address the increasingly complex regulatory environment.
How significant is the use of blockchain in the financial sector and what are the opportunities and challenges involved with blockchain adoption?
Blockchain is a disruptive technology; it is reshaping data and finance at an unprecedented speed, and it will be adopted, one way or another, in the financial sector. Smart contracts and the essence of decentralized technology, which aims to reduce inefficiencies by removing intermediaries, have already seen significant adoption by many participants in the financial sector. Financial intermediaries hold incredible quantities of customer data and some with vulnerable infrastructure making them susceptible to cyber-attacks which, in turn, can be devastating. There is also a relative amount of inefficiency when you look at the amount of time and money spent to process a transaction. Blockchain could solve both problems of data privacy and transaction speed/cost. This is not to say that blockchain technologies do not involve risks but more to identify and set in place the appropriate risk mitigants in order to address those potential risks. This will, hopefully, provide regulators with the relative comfort to allow for the wider usage of such technology, and perhaps even adopt it themselves for some of their own processes.
In your capacity as CEO of Pen Hill Wealth Advisors as well, what would you say are the main challenges currently facing the investment landscape and particularly the world of HNWIs?
The continued low-interest environment of the last few years following the prolonged quantitative easing programmes by the major global central banks has significantly changed the investment landscape and the perception of investors in the High Net Worth space as well as in the Family Office space in the context of risky assets. The consequent lower level of returns in traditional asset classes, predominantly in fixed income, but also in certain equity sectors, has turned a lot of HNWIs and FOs into the Venture Capital (VC) and Private Equity (PE) space. This space, however, entails far greater risks and much more in-depth due diligence and understanding of the respective industries that extends beyond the financial context and into the operational and legal due diligence space. We have thus seen a proliferation of VC and PE advisors and fund managers that offer their expertise to engage clients in this space. In addition, FOs face intergenerational challenges, which call for placing an appropriate governance framework and constitution in place along with successful succession planning and family member training. The use of technology and digitisation has risen significantly on their agendas, while cost management has become a higher priority too.
In your opinion, how can Cyprus adapt its regulatory framework and what government incentives need to be introduced to encourage fintech innovation and attract new investments?
Cyprus counts many achievements that have helped attract fintech investments, including the IP box regime, our headquartering incentives, the investment in training local talent
and supporting entrepreneurship networks. There is, however, room for improvement in various sectors that are directly or indirectly related to the efficiency of the model we are promoting to foreign investors. This includes the better utilization and expansion of Invest Cyprus, more exposure and visibility via specialized business forums abroad, speeding up our legal processes, adopting a fast-track programme for investments of a certain size and above in the Republic, improving flight connectivity and transforming the banking sector into a more efficient and digitalized environment.