Wealthtech platforms allow customers to buy, sell and hold financial securities and products in either their local jurisdiction or internationally.
These platforms require easy and integrated access to FX capabilities (pricing and execution) as they allow end users to purchase financial assets (e.g. stocks on NASDAQ) cross-border. As a result the end user will need to convert from their local currency to the currency of the local asset market (USD for NASDAQ).
Typically these platforms will process a large amount of transactions requiring flexibility in settlement options and reconciliation services.
For additional information on how the entire Airwallex product suite can support Wealthtech platforms, please click here.
Some Wealthtech platforms have an existing solution to manage the sub-ledger of their customers' positions and settlement. In this implementation the platform will integrate with Airwallex to manage the conversion from one currency to another to ensure cost-effective and fast settlement between the end user and any intermediary (e.g broker).
- A Wealthtech platform in EU allows their EU customers to purchase US stocks using USD.
- EU customer will request to buy a certain amount of US stock.
- The platform will determine the price required to pay for the stock in USD and price in EUR (local currency) using Airwallex’s MarketFX API or LockFX API solutions.
- The platform will surface the purchase amount in EUR to the customer.
- The customer will accept the price and transaction. They will be prompted to fund this transaction using EUR via a payment gateway (ie. bank transfer).
- The platform will execute a conversion with Airwallex, via Conversion API, to lock in the desired USD amount to fund in EUR.
- On the selected conversion date, if the platform’s wallet balance is sufficient, Airwallex will convert EUR to USD immediately. If the wallet balance is insufficient and they are enabled for post-fund, Airwallex will release USD as soon as the customer’s EUR deposit is received.
- The platform can now use the funded USD to settle the US stock purchase with the intermediary on behalf of their customer.
Wealthtech players can opt into Airwallex’s Scale implementation and have Airwallex manage their users' balances separately via connected accounts. This means each platform user will have their own underlying Airwallex account where they are able to deposit directly into their wallet. The platform is then able to transact and perform actions on behalf of their users such as conversions and payouts.
- When a new EU user signs up to the platform, the platform will initiate and create an Airwallex connected account for the user.
- The EU user can deposit EUR funds directly into their created Airwallex connected account. The platform will surface the deposit details via the Global Account API.
- The EU user converts EUR to USD in preparation to buy US stocks. The platform will perform this action on behalf of the client using the Scale implementation of the Conversion API.
- EU customer will request to buy US stocks for a specified USD amount and confirm.
- The platform will deduct funds from the user’s connected account, on behalf of the user, equal to the specified USD amount. This can be done by the Scale Transfers API.
- Platform will purchase the underlying US stock and reflect this back to the end user.