Jacques Lolieux (Aplo): "The compliance team is the biggest in the company".

What exactly do you do at Aplo?

We are a prime broker registered in France with the Autorité des marchés financiers (AMF) and the Autorité de contrôle prudentiel et de résolution (ACPR). Our mission is to offer digital asset services to professional and institutional investors. We enable them to buy and sell on the markets, but we can also provide custody, hedging and so on. In short, we offer everything that a traditional prime broker like Morgan Stanley or BNP Paribas does, but adapted to digital assets.

‍What makes you different from a traditional broker?

We operate in the same sphere, but we don't target retail clients. Where we stand out is that we have tools specially designed for financial institutions, particularly on risk management, cross margin, algorithms, etc. At the moment, our average orders are several hundred thousand dollars and we are targeting customers who need to place several million. To give you an idea, the biggest order we've ever handled was for a billion dollars. We currently have several tens of millions under management. 

‍And of a market maker?

The problem with market makers is that they fetch assets on OTC and that makes their prices opaque. With Aplo, everything is transparent for the customer, who can consult all the details of the transactions. This is vital for institutional investors, who can save millions of dollars on large orders. Secondly, our transparency enables them to justify the acquisition process to their own clients. Nevertheless, market makers sometimes provide important services, which is why we are also connected to them. We want to bring together the best of both worlds.

‍What are your fees?

They are not public, but we charge for account management as well as transaction volume.

‍What is the appetite of traditional institutional investors for digital assets?

This is measured in two places. On the one hand internally with the youngest recruits who want to work on this type of asset, but we are also noticing external demand from family offices and private banks who have clients who want exposure to digital assets otherwise they will look elsewhere. In my opinion, this signals that we are facing a new asset class and that many people are going to be interested in it, if only for diversification.

‍Who are your big clients from the traditional world?

While the bulk of our activity is currently with native players in the digital asset universe, we are in advanced discussions with major European, Asian and North American investment banks. We're also talking to large institutional asset managers.

‍Many of them don't have a perfect knowledge of the sector, what requirements do they have when they come to you?

Things have evolved. Two years ago, the main question revolved around the price of services, but recent events (the collapse of the FTX exchange platform in 2022, editor's note) have shifted the priority to the security of funds. This security must be demonstrated on several levels: resilience in the face of piracy, and resilience in relation to third-party suppliers such as exchange platforms. Aplo has been very demanding in this area for a long time. The proof: our system protected us from the collapse of FTX, even though it was one of our suppliers.

‍How do you ensure the safekeeping of assets?

We have developed a system in which we keep customer funds. We do not entrust them to any third party. After that, two options are possible depending on the client's expertise: accounts from which our technical team is responsible for executing everything as efficiently as possible, or segregated accounts with which clients place their orders themselves from our platform.

‍Some institutional clients sometimes need independent third-party custodians, what do you have to offer them?

We are in advanced discussions with leading players who would act as custodians and offer our services on top of their infrastructure. We want to address all clients, including those with a requirement of this type.

‍How are you approaching the transition to MiCA regulation?

We are eagerly awaiting the promulgation of the European directive and its transposition into law. But we are already operating as if the MiCA framework were in place, or even as if we were under MiFID regulation, which governs all financial instruments in Europe. This is reflected in the size of our compliance team: it is the largest department in our company, with a staff of around thirty. We have recruited some very high calibre people, including former members of the European Central Bank.