Hedgeweek Interviews
PGIM Investments expands alternative investment lineup with new PGIM Wadhwani fund
PGIM Investments continues to expand its platform of alternative investment solutions with the launch of the PGIM Wadhwani Systematic Absolute Return Fund, a proprietary quantitative and systematic global macro strategy seeking long-term risk-adjusted total return.
This is PGIM Investments’ first PGIM Wadhwani strategy offered as a US mutual fund.
“Investors are facing a challenging market environment where stock market valuations are historically high and bond market yields are historically low. Alternative investment solutions like global macro strategies may offer a compelling way for investors to generate uncorrelated risk-adjusted returns to complement their traditional 60/40 portfolios,” says Stuart Parker, president and CEO of PGIM Investments.
The fund invests across global equities, fixed income and currencies (directly or through the use of derivatives), taking both long and short positions, in an effort to capture alpha opportunities while limiting downside risk. With its dynamic asset allocation strategy, the fund seeks to remain nimble in quickly changing market environments.
“With risk management integral to the way we construct portfolios, we employ an agile approach, dynamically tilting and timing our exposures and combining signals in a non-linear fashion to try to limit portfolio drawdowns,” says Dr Sushil Wadhwani, CBE, chief investment officer of PGIM Wadhwani and a named portfolio manager of the fund. Dr Wadhwani has 31 years of investment experience, which includes work in academia and the financial sector, as well as several years on the Bank of England’s Monetary Policy Committee.
Like this article? Sign up to our free newsletter Author Profile Related Topics Funds Launches & FundraisingNorthern Trust collateral optimisation capability helps investors meet UMR obligations
Northern Trust (NTRS) has launched an automated solution for initial margin calculation to help asset manager and asset owner clients comply with global regulations governing trading of over-the-counter (OTC) derivatives.
The solution, made available to clients in advance of a key deadline for implementation of Uncleared Margin Rules (UMR), was developed as part of Northern Trust’s integration of Acadia’s margin management solutions and fully complements Northern Trust’s full suite of collateral and OTC processing capabilities.
“Our integrated global architecture and investments in core technology allowed us to build a unified solution for all collateral clients and is a great example of our technology vision at work,” says Pete Cherecwich, President of Corporate & Institutional Services at Northern Trust. “By investing the time and technology up front, we can deliver solutions that offer agility, automation, and long-term value.”
Through its partnership with margin and risk management expert Acadia, Northern Trust offers market-approved, automated support for an independent calculation of initial margin to help investors in OTC derivatives meet complex UMR requirements. Leveraging algorithmic technology to identify the best assets available to meet regulatory eligibility requirements, the solution identifies optimal assets to be deployed to meet margin obligations – helping our clients maximise investment performance.
“A key differentiating feature of this initiative is that our investment in technology architecture allowed us to identify, integrate, test and launch the solution in full ahead of the regulatory deadline,” says Nadia Ivanova, Head of C&IS Business Services and North America Asset Servicing Chief Operating Officer at Northern Trust. “By pairing this solution with our other derivatives enhancements, we’ve been able to automate previously manual processes for faster processing and greater accuracy.”
These advanced capabilities are part of Northern Trust’s comprehensive range of collateral, derivatives and liquidity management solutions. Clients can access these services globally, either on a component basis – to complement their current in-house practices – or as part of a broader suite of collateral management solutions.
Like this article? Sign up to our free newsletter Author Profile Related Topics Services Compliance Trading & ExecutionOptions opens new Toronto office
Options, the leading provider of managed trading infrastructure and connectivity to the global Capital Markets, has opened a new office in Toronto.
As Options continues to increase its client base across Canada, locating in Toronto provides a strong foothold for the company to develop and deepen its support for clients across regional Canadian markets.
To manage Toronto operations, Robert Strawbridge was appointed as the Options’ VP Head of Canada late last year, bringing with him over a decade of experience working with numerous foreign exchange technologies and e-Trading platforms. As a former Scotiabank executive, Robert is well-positioned to support Options clients on the ground. In addition to client support, he is responsible for the expansion of Options' client base alongside the management and recruitment of staff in the region.
Danny Moore, Options’ President, and CEO, says: "Options has experienced a period of exponential growth on our platform over the past number of years, including double-digit growth across our Managed Colocation business. Toronto is known for its deep talent market and having worked with clients in the Toronto region for many years now, it was clear to us that this innovative, vibrant city was the obvious place for our next office opening.”
Toronto Mayor, John Tory, says: “The Toronto Region has emerged as a North American leader in the convergence of financial services and technology. International businesses are choosing to invest in the region, leveraging the fastest-growing tech talent pool in North America. I’m thrilled that Options will call Toronto home, with one of the most educated and diverse workforces in the world – creating jobs for our talented residents and contributing to regional economic recovery and growth.”
Today’s news marks the latest in a string of announcements for Options, including the acquisition of Fixnetix, their partnership with Packets2Disk to provide Market-Leading Network Analytics, and a decade of SOC compliance.
In 2019, Options received investment from Boston-based Private Equity Firm, Abry Partners. This investment has enabled Options to accelerate its growth strategy and develop its technology platform whilst expanding its reach in key financial centres globally.
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsEventus makes more key hires in EMEA
Eventus Systems, Inc, a global provider of multi-asset class trade surveillance and market risk solutions, has made several key hires in Europe as part of the firm’s continued growth in the region and globally.
Bringing extensive experience into the new roles are Ollie Cadman as Chief Product Officer, and David Griffiths and Martin Appiah, both as Director of Regulatory Affairs.
Based in Stockholm, Cadman reports to Eventus CEO Travis Schwab, while Griffiths and Appiah – both based in the UK – report to Joseph Schifano, the firm’s Global Head of Regulatory Affairs.
Cadman will build out the firm’s global product team and provide a framework for expanding its product offering. Appiah will help ensure that Eventus’ growing client base in the Europe Middle East and Africa (EMEA) region are able to meet the evolving demands of local regulations and client risk assessments through the firm’s Validus platform. Griffiths, who has deep experience in the UK, EMEA and Asia-Pacific regions, will spearhead the firm’s client implementation program globally to ensure new clients maximize the effectiveness of the surveillance procedures, resources and flexibility available to them in Validus.
Schwab says: “We’re very proud to continue attracting tremendous talent to the organisation and to methodically build on our team with some of the most experienced and knowledgeable professionals in the business, who understand first-hand the challenges our clients face. Ollie has a powerful background in product development and client service leadership roles within some of the most prominent firms in the industry and is ideally suited to take on our new Chief Product Officer role. Martin and David are trade surveillance subject matter experts who’ve closely followed and analysed regulatory developments, particularly in the regions in which they’ve served. Each of them will play important roles in enabling us to provide the best possible service to our clients conducting business globally and in the EMEA region.”
Eventus established its first on-the-ground presence in Europe last year. After nearly quadrupling its staff globally since its Series A funding in February 2020, the company earlier this month announced that it closed on a USD30 million Series B funding round. Proceeds will support the firm’s continued growth to meet strong demand, with plans to more than double its workforce around the globe, expand its product suite and add new financial risk applications.
Cadman has broad product management and business development experience in financial markets and technology, including at Intercontinental Exchange (ICE) and the London Stock Exchange Group, Morningstar and JP Morgan. Most recently, he was at Vela Trading Systems for nearly five years, culminating in his role as Chief Product Officer. In the global position, Cadman was responsible for product management and development, product operations, market data licensing, exchange connectivity and client support. He also served as a director for the firm’s business in the EMEA and Asia-Pacific (APAC) regions.
Prior to joining Eventus, Griffiths was Head of Trade Surveillance for SteelEye Ltd since 2020. He previously was with Cider Barn Group Consulting, serving as Product Director for a strategic partnership between Nasdaq and Digital Reasoning. Griffiths has also held senior compliance strategy and trade surveillance roles at JPMorgan Chase, Standard Chartered Bank and Oracle Mantas.
Appiah has provided compliance and surveillance expertise through a variety of senior and consulting roles across multiple asset classes at some of the largest banks and brokerage firms in the industry. Most recently, he was Compliance Surveillance SME (Subject Matter Expert) at Royal Bank of Canada (RBC), after serving as Lead Consultant for Compliance Surveillance Remediation and earlier as Compliance Surveillance Officer for Nomura International Plc. He also held roles in risk advisory, compliance and surveillance at global consulting firm Deloitte, Santander Group Corporate Bank, BGC/Cantor Fitzgerald Europe, BNP Paribas and JPMorgan Chase.
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsInstitutional investors and wealth managers set to invest in cryptoassets for the first time
A new survey of institutional investors and wealth managers from the US, UK, France, Germany, and the UAE who collectively don’t currently have exposure to cryptocurrencies and digital assets, reveals that 62 per cent expect to invest in these for the first time within the next year.
However, Nickel Digital Asset Management (Nickel), a European investment manager dedicated to the digital assets market, which conducted the study, says in most cases this will just be professional investors ‘testing’ the market in terms of how it works, its infrastructure and liquidity.
The main reason given for investing in digital assets for the first time is the long-term capital growth prospects of cryptocurrencies and digital assets – the view cited by 47 per cent of respondents. This is followed by 44 per cent who said it is because more corporates and fund managers are investing in cryptocurrencies, which gives them greater confidence in the asset class, and 41 per cent who said it is because the regulatory environment is improving. One in three (34 per cent) said it is because it is a good hedge against inflation.
Henry Howell, Head of Business Development of Nickel Digital, says: “There is no doubt that the cryptoassets market is becoming more mainstream in the institutional and wealth management sectors. This is being driven by several factors including strong market performance during the Covid crisis, more established investors and corporations endorsing the market, and the sector’s infrastructure and regulatory framework improving.
“As these trends continue to evolve, this will fuel further growth in the market from professional and sophisticated investors.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital Assets Surveys & researchGuidance for investors on the Reporting Fund Regime
PARTNER FEATURE
Stephen Kenny (pictured) and Daniel Edgson from Blick Rothenberg’s Financial Services team take a look at the Reporting Fund Regime and provides guidance on what UK investors and individuals need to be aware of.
What is the Reporting Fund Regime?
The Reporting Fund Regime was introduced for periods commencing on or after 1 December 2009.
The regime allows UK investors to treat realised gains in qualifying offshore funds as capital disposals. Such gains are taxed at Capital Gains Tax rates rather than the higher Income Tax rates payable on disposals of interests in non-qualifying funds.
In return for this beneficial tax treatment the investor is required to pay Income Tax on their share of the annual ‘reportable’ income of the fund, whether received or not.
In return for this beneficial tax treatment the investor is required to pay Income Tax on their share of the annual ‘reportable’ income of the fund
Why was the regime introduced?
The regime was introduced to prevent investors from obtaining a tax advantage by reinvesting income back into offshore funds rather than bringing it onshore.
Gains in respect of an offshore fund are subject to Income Tax unless the fund has joined the regime.
Reporting fund status can therefore be attractive to UK-resident investors due to the disparity between the top rates of Capital Gains Tax and Income Tax.
How does a fund join the regime?
Funds wishing to join the regime are required to make an application by submitting a form CISC 1. This should be made before the end of the first period for which the fund wishes reporting status to apply. Advance applications are also possible.
What are the ongoing requirements?
A qualifying fund should perform a calculation of reportable income on an annual basis and provide this to both HM Revenue & Customs (HMRC) and investors within six months of the fund year end. Investors report this income on their personal tax returns and pay Income Tax on it accordingly.
The calculation of reportable income requires the accounting profit to be split between qualifying share classes.
This is adjusted to remove any capital gains and to include any relevant income, such as effective interest, which is not recognised in the fund accounts. The reportable income is also adjusted for any distributions made by the fund in respect of the year.
What about funds of funds?
For multi-tiered funds, further adjustments are required to reflect the reportable income of the underlying funds in which they invest.
The methodology for achieving this depends on the reporting fund status of the sub-fund and the level of access the fund has to the sub-fund’s records.
What about individuals?
Where a fund changes from being a non-reporting fund to a reporting fund, for an individual this does not automatically change the treatment on disposal from Income Tax to capital gains.
It can be necessary for the individual to make an election to be taxed on the gains up to the date of change in status. This can trigger a dry tax charge on the individual.
Where you are a participator in a fund which changes status, we would be able to discuss the tax implications and the best way to protect your tax status going forward.
How Blick Rothenberg can help
We have been preparing applications and calculations of reportable income from the start of the regime. We have experience of dealing with a broad range of fund structures and work effectively with fund administrators to ensure funds remain compliant with the regime with the minimum of disruption to your business.
We currently act for over 50 funds with reporting fund status. We work closely with both fund administrators and HMRC to ensure our clients remain compliant.
We can help you with:
- Application for reporting fund status
- Provision of advice on the implication of reporting fund status to the fund’s investors
- Preparation of the annual reporting fund calculation and the report to participators
- Preparation of the effective interest adjustment
- Provision of compliance advice on the merger or closure of funds
Next steps
If you would like to discuss your specific circumstances or if you have any further questions on the Reporting Fund Regime, please contact Stephen Kenny or Daniel Edgson.
Visit Blick Rothenberg’s Financial Services sector hub to find out more.
Like this article? Sign up to our free newsletter Author Profile Related Topics Legal & Regulation UKLarger funds of hedge funds dominate in H1, Citco data shows
Funds of hedge funds generated an average gain of 4.2 per cent during the first six months of the year, outflanking long/short equity hedge funds and convertible arbitrage strategies, with larger portfolios pulling ahead of the pack as bigger proved to be better in H1.
New analysis by Citco Fund Services shows funds of hedge funds maintained their positive momentum from 2020 – when they ended the year up more than 11 per cent on average – with a 4.2 per cent average return, and a median return of 4.3 per cent, between January and June this year.
The “vast majority” of FoHFs delivered positive returns, with 92 per cent recording positive performance in the six-month period. That helped the strategy attract some USD2.5 billion in net capital inflows, according to Citco’s ‘’H1 2021 Fund of Hedge Fund Update’.
The study – which explored Citco-administered funds of hedge funds with more than USD30 million in assets – found that larger portfolios with broader diversification outperformed smaller, more concentrated vehicles.
Specifically, funds over USD1 billion were up 5.1 per cent between January and June-end – with 92 per cent ending H1 in positive territory – while funds with more than 50 underlying fund holdings returned 5.7 per cent in the first six months of the year.
By comparison, FoHFs with between USD500 million and USD1 billion gained 4.90 per cent, with 83 per cent in positive territory.
FoHFs managing USD200-500 million were up 4.70 per cent, as 93 per cent made positive returns, and those with under USD200 million generated gains of 3.6 per cent, with 92 per cent in positive territory.
The strategy’s 4.2 per cent first half returns were ahead of both long/short equity hedge funds, which ended H1 up 2.73 per cent, and convertible arbitrage strategies, which gained 1.68 per cent, according to Citco data. However, FoHFs lagged both global macro funds (8.63 per cent) and multi-strategy managers (7.11 per cent).
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Funds Investments Long-short investing Investing in Hedge Funds Funds of Hedge FundsGeneva-based investment advisor sees HNWs continue faith in multi-manager firms
Over the past four years, high-net-worth investors have shown a preference for multi-strat specialists, as allocators search for hedge fund strategies capable of better controlling risks and locking-in returns.
Sherban Tautu, Head of Liquid Alternatives at Syz Capital, a Geneva-based wealth advisor, with a long relationship with the hedge fund space, explains the current importance of multi-strat funds, describing them as “stabiliser investments, where risks are tightly controlled, and returns of 5-10 per cent per year are probable.”
Syz advises on CHF1 billion for a small group of families based across Europe, Brazil, the Middle East and Asia. Tautu explained that 60 per cent of its total investments are in hedge funds, including a number of multi-manager and multi-strat specialists such as Millennium Management, Point72 Asset Management and Balyasny.
Currently the firm works with 90-100 hedge fund managers, with Tautu describing multi-strategy and multi-manager platforms as “an ideal way” to start building a foundation for a portfolio, commenting that: “30-40 per cent of investments are placed with secure and successful investment management firms, and 50-60 per cent are invested in alpha seeker managers and experts in their fields.”
This year to date, according to Barclay Hedge Fund Indices, multi-strategy funds have returned 8.51 per cent against a sector-wide increase of 9.88 per cent.
As well as multi-strat players, Syz Capital also invests in managers with a focus on long-short equity strategies across biotech, the security sector, the cloud sector and various areas of the global tech markets.
Tautu described these investments as the innovative side to Syz Capital, and said that, when choosing its managers, Syz Capital looks for strategies with a competitive edge, whether geographic or information-based, which operate in a clear niche, and which must be sustainable across 2-3 years.
He stated that his clients’ current main concerns in the hedge fund space are poor performance and high fees.
Tautu remarked: “The industry as a whole has performed relatively poorly in past years, in comparison to the equity market which has been booming.” On fees he commented: “It’s frustrating to clients when they see that managers are being paid more in fees than they themselves are making in returns from their investments.”
All in all, Tautu thinks that multi-manager funds succeed in bringing stability and good performance to clients’ portfolios.
Like this article? Sign up to our free newsletter Author Profile fiona.mcnally Employee title Reporter Linkedin Related Topics Business & Services Funds Investments Long-short investing Investing in Hedge FundsPreqin teams with IVCA to launch Indian AIF benchmarks
Preqin has entered a partnership with the Indian Private Equity and Venture Capital Association (IVCA), under eligibility from the Securities and Exchange Board of India (SEBI), to produce performance benchmarks for alternative investment funds (AIFs) as an official benchmarking agency.
AIFs in India - classified as CAT I, II or III - operate across a wide range of asset classes including private equity & venture capital, real estate, infrastructure, private debt, and hedge funds. With a total of more than 730 such funds currently, they represent a part of the alternative investments ecosystem that is growing and becoming increasingly important in APAC and the wider world. Indeed, India's AIF industry has grown quickly from USD35.5 billion at the end of 2016 to USD60.5 billion by December 2020 - an increase of more than 70 per cent in total commitments for SEBI registered funds alone.
These benchmarks will provide a top-level overview on a range of indicators such as IRR, called capital, DPI, and RVPI on the predominant strategies that are employed by domestic managers. Such data is crucial for investors conducting portfolio analysis and due diligence, while managers rely on this for performance benchmarking and reporting.
The Preqin research team will be reaching out to managers of AIFs from 11 October 2021 to 10 December 2021 to collect performance data and we expect the benchmarks to be made available in the H1 2022. We look forward to speaking to industry stakeholders and playing a key part in the continued growth of India's AIF market.
Ee Fai Kam, Head of Asia Research & Operations, says: "Preqin has been at the forefront of performance measurement and benchmarking since day one, this partnership with IVCA – the top industry body for alternative investments in India - will provide market participants with a deeper understanding of returns and how India compares with other countries and regions. My team and I are very pleased to be a part of this exciting development in the Indian alternative investments space. This represents another milestone in the coming-of-age of APAC and the maturing conversation around fund performance and transparency in this region."
Gopal Srinivasan, Chairman and Managing Director, TVS Capital Funds and Senior Board Member, IVCA, says: "The performance benchmarking of AIFs represents a global best practice by SEBI. It is a great step ahead for the Indian AIF ecosystem as it brings much-needed transparency on the performance metrics to increase the flow of domestic capital. The idea is to create benchmarks with excellent domestic and global agencies conducting the exercise. IVCA is pleased to be associated with Preqin and look forward to working with them to bring in their global standards to this process. AIFs and investors will see a lot of value with Preqin also coming in as a benchmarking agency, bringing with them global best practices."
Like this article? Sign up to our free newsletter Author Profile Related Topics Services Research & AnalyticsBaton Systems appoints President
Baton Systems, a fintech transforming asset movements and settlements with solutions based on distributed ledger technology, has appointed Jerome Kemp as President.
Kemp joins the rapidly-growing business at a crucial time as demand for fully digital market infrastructures across the entire post-trade process accelerates. He brings 35 years’ experience in scaling businesses in the cleared derivatives space, with a track record of driving innovation to deliver transformational impact.
Prior to joining Baton, Kemp was Global Head of Futures, OTC Clearing, and FX Prime Brokerage at Citi, where he built the cleared derivatives business to a position of global leadership. Kemp was also Chair of the Futures Industry Association (FIA) Board from 2018 to 2020, where he earned a reputation as a visionary and thought leader in how the market’s infrastructure needs to be transformed to keep pace with the evolving needs of global market participants.
Kemp will lead Baton’s growth across markets, leveraging valuable international experience gained in senior leadership positions held in Paris, London and Tokyo during his career. In addition to his most recent role at Citi, Kemp previously spent 18 years at J.P. Morgan, where he rose to Global Co-Head of the Futures and Options and OTC Clearing business.
Kemp will work closely with Baton Founder and CEO, Arjun Jayaram, in his new role.
Arjun Jayaram, Founder and CEO of Baton Systems, says: “I’m delighted that Jerome is taking up this leadership role at such a crucial time for Baton. Having a practitioner with Jerome’s exceptional calibre, wealth of experience and vision helping to drive Baton forward will prove invaluable as we scale to meet market needs - it will ensure we continue to place our clients at the very core of all we do. I look forward to working with Jerome to accelerate our growth plans globally.”
Kemp says: “Baton is delivering today what I believe will become the new global standard for payments and settlements - it’s hugely exciting and I am proud and humbled to have been asked by Arjun to step into this leadership role. Today, post-trade processing is slow, opaque, restrictive, and costly. Baton is revolutionising the entire front to back process, from trade matching through to settlement - allowing settlement participants to take control with automated workflows, access to real-time information, and on-demand settlement. Baton is ultimately defining the infrastructure that will underpin the markets of tomorrow.”
Kemp’s appointment follows the news earlier this month that former Basel Committee Secretary General, William Coen, had joined Baton as a Senior Advisor.
Baton’s solutions are now being used by a number of large financial institutions, including G-SIBs, to facilitate the movement of billions of dollars of cash and securities on a daily basis. Baton enables transparent, flexible and friction-free post-trade processing, addressing the significant challenges posed by the prevalence of the industry’s existing server-based infrastructures that result in prolonged settlement exposure, high funding costs and significant liquidity challenges.
The SBAI Continues to Focus on Culture and Diversity in the alts industry
The SBAI, a global alliance of alternative investment managers and allocators and custodian of the Alternative Investments Standards, has released the first publication as part of its Culture and Diversity Initiative - Principles of Culture and Diversity Strategies.
There is general acknowledgement in the alternatives industry that diversity can help to improve industry outcomes, but putting in place an effective strategy to promote diversity can be challenging. The SBAI’s report provides five guiding principles which act as a framework for asset managers and allocators to define their own culture and diversity strategies.
In February 2021, the SBAI formed a Global Advisory Committee comprised of senior industry leaders from asset managers and allocators. This Advisory Committee provides guidance on the strategic direction of the SBAI’s Culture & Diversity initiatives.
Jane Buchan, Chair of the Global Advisory Committee, SBAI Trustee, and CEO of Martlet Asset Management, says: “We are thrilled to have a large and committed group of industry leaders helping guide our efforts on culture and diversity. As asset managers and allocators, we must work collaboratively to solve for better and the SBAI provides a great platform to do this.“
The SBAI’s Culture & Diversity initiative’s primary objective is to provide practical tools to help improve culture and diversity in the alternatives industry. The initiative will produce further guidance, including reports focusing on smaller firms and manager selection for allocators, as well as host discussion forums and informational events on the topic. Following the publication of this report on Monday, the SBAI hosted a Culture & Diversity event titled "Moving Beyond the Why for Culture and Diversity in the Alternatives Industry". The discussion was led by Jase Auby (CIO of the Teacher Retirement System of Texas), Leda Braga (SBAI Trustee and CEO of Systematica Investments), Luke Ellis (SBAI Deputy Chair and CEO of Man Group), and Phillip Meyer (COO, GC and CCO of Oasis Management Company) – all members of the Global Advisory Committee.
Mario Therrien, SBAI Chair and Head of External Investment Funds and External Management at CDPQ, says: “Through our collaborative platform of asset managers and allocators representing over USD5 trillion of assets in our industry, at the SBAI, we have an important role to help drive responsible practice, partnership, and knowledge on various topics, including culture and diversity. Ultimately, we seek to improve industry outcomes. I am excited to see this report published and look forward to future publications later this year.”
Maria Long, Research and Content Director of the SBAI, says: “Our mission is to solve for better and culture and diversity is an important part of this. In collaboration with our asset manager and allocator community, through both our culture and diversity working group and the Global Advisory Committee, we have focused on moving past why this is important and on to providing practical guidance on how to improve diversity.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Diversity & Equality Surveys & researchDigital assets investment products continue to see inflows
Digital asset investment products saw inflows totalling USD95 million last week, bringing the total run of inflows over the last six weeks to USD320 million, according to the latest Digital Assets Fund Flows Weekly report from Coinshares.
The continued inflows suggest the recent headwinds for digital assets, such as the widened China ban, were seen as buying opportunities for investors.
Ether followed bitcoin with inflows totalling USD29 million last week. Sentiment has remained relatively buoyant for ether as the amount staked to Eth2.0 progresses.
Solana and polkadot continue to see outsized inflows totalling USD3.9 million and USD2.4 million, representing 4.5 per cent and 3.2per cent of AuM respectively.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital AssetsLive and let fly: Short sellers trounced as 'James Bond effect' sends Cineworld shares soaring
Hedge fund short sellers betting against Cineworld have seen their bearish positions tank after the global cinema chain’s share price rocketed on the back of the new James Bond movie release.
AHL Partners, Polygon Global Partners, New Holland Capital and Adelphi Capital are among the hedge funds currently holding negative wagers against the London-headquartered FTSE 250-listed firm, according to regulatory disclosures made to the Financial Conduct Authority.
Highbridge Capital Management is also holding a 1.14 per cent net short bet, while Whitebox Advisors is positioned short by some 1.40 per cent.
Cineworld – a long-running target of hedge fund short sellers on both sides of the Atlantic – has seen its share price surge in recent days, rising 14 per cent over the past week. It continued to climb on Monday, hitting 80.35, up from 60.50 in mid-September.
The troubled movie theatre operator had been forced to shutter 767 outlets globally throughout much of the Covid-19 pandemic. In March this year the group reported an eye-watering USD3 billion pre-tax loss for 2020 which knocked the living daylights out of its share price.
Even before the pandemic the company had been among the most heavily-shorted publicly-traded UK stocks in recent years, as the spectre of online streaming and home entertainment services challenged its business model.
Earlier this year, high profile hedge funds Marshall Wace, BlackRock and Citadel Advisors also held negative wagers on the group.
The dramatic rebound has been attributed to the highly-anticipated release this week of No Time To Die, the latest instalment in the James Bond 007 franchise, which has suffered multiple delays due to coronavirus.
“The return of Bond to the screens appears to have been the agent of change movie companies sorely needed,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said on Monday.
“Business was severely shaken during the pandemic with screens shut and blockbusters delayed and there are early indications that Bond is already helping stir up a surge in much needed bookings.”
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Coronavirus Business & Services UK Funds of Hedge FundsExchange Council welcomes successful product development in EEX Natural Gas markets
The Exchange Council of the European Energy Exchange (EEX) has welcomed the good preparation of the upcoming gas makets merger in Germany as well as the positive developments of the new Gas Financial Futures.
On 1 October 2021, the two gas markets GASPOOL (GPL) and NetConnect Germany (NCG) will merge into one German nationwide market area named Trading Hub Europe (THE). A number of EEX teams have been working to support all market players and stakeholders with this change, especially by providing trading solutions which will facilitate the smoothly merging of two hubs into one.
The new nationwide German market area is a milestone for the further development of German gas trading, resulting in a uniform German reference price and bringing more liquidity and competitiveness. As a leading platform for gas trading in Germany, EEX will introduce 13 new zonal gas quality-specific products in the THE Spot market. Both physical gas futures and new financial gas futures (EGSI Futures) will be available for trading on the new THE market area.
In addition, the Exchange Council has welcomed the positive development of the EEX Financial Gas Futures cash-settled against the European Gas Spot Index (EGSI) which were introduced in June 2021. EGSI Futures cover the whole curve from short term (Day Futures, Weekend and Week contracts) to longer term maturities (Month, Quarter, Season and Calendar Year). As they mirror power futures curves, they enable EEX members to trade the price difference between financial gas futures and existing highly liquid financial power futures via dedicated Spark Spreads. EGSI Futures have seen strong and rising interest across the European markets over the summer, attracting players from the traditional gas trading community and financial companies. Record participation rates were reported on the Dutch TTF hub and the first trade was also registered on the Austrian CEGH in the past weeks, paving the way for further liquidity.
Like this article? Sign up to our free newsletter Author Profile Related Topics MarketsRFA Launches Application Lifecycle Management
RFA, the IT provider to the financial services industry, has launched a new Development Security Operations (DevSecOps) service for its clients.
RFA works with the professional financial services and alternative investment sectors, offering IT innovation and services in cloud solutions, cybersecurity, managed data and IT service management.
Focussing on providing exemplary service and support, RFA has developed Application Lifecycle Management as an addition to its Data Management suite of services.
Providing Code Security by applying a new principle of DevSecOps after a year of testing, RFA has integrated an additional step that performs a static code analysis against security vulnerabilities during the build process into its continuous integration and deployment practice.
This enables development teams to be agile and deploy multiple times a day, without comprising security. Most coding practices require scheduled reviews and third-party auditors that do not provide real time monitoring.
Yohan Kim, CEO at RFA, comments: “The world of development has become more dependent on open-source packages, and it greatly increases the risk in the introduction of vulnerable or compromised software packages. Several instances of theft at Crypto funds were due to a lack of code security. Code was manipulated by hackers to reroute funds while the company was unaware of the changes during deployment into production. RFA's DevSecOps process protects our applications as well as our clients’ applications to greatly reduce these types of exploits."
The shift in the sophistication of cyber-attacks means development of open source projects, products, or initiatives by development teams can be at greater risk of cyber breach. An early adopter of new technologies and development practices, RFA is supporting its clients to embrace the principles of open exchange and collaborative participation with the Application Lifecycle Management tool.
George Ralph, RFA's Global MD and CRO, comments: "RFA has a proven track record in IT innovation. Our DevOps team have made great advances in the last year to support our clients with ongoing security challenges created by the rise in cyber criminals’ activity. Cybersecurity is a key concern for traditional funds but also for newer digital asset funds entering the market and at RFA we are well equipped to provide leading service and solutions to all alternative asset managers."
Cyberdyne Tech Exchange launches Carbon Neutrality Token
The Cyberdyne Tech Exchange (CTX) has released and sold the first tranche of a new asset-backed Carbon Neutrality Token (CNT) which resolves one of the most challenging aspects of the Paris Agreement (COP21) – the ability to properly account for and track carbon credits using its proprietary protocols and blockchain technologies.
With the COP26 in Glasgow approaching, the failure to resolve the complexities of Article 6 of the Paris Agreement has led to delays in financing green projects, accelerating the climate crisis.
COP21 required nations reduce their emissions every five years. By creating nationally determined contributions (NDCs) for cutting emissions, the clear expectation was that nations would act, by submitting new or updated national climate plans. However, ambiguity in transparency and commitment to implementing more ambitious targets means that the world is well behind in achieving the 1.5C temperature target set out in Paris.
The responsibility of carbon offsetting does not simply rest with governments. Companies have a crucial role to play in addressing the climate crisis – even on a voluntary basis. The Taskforce on Scaling Carbon Markets and Deloitte has estimated that the current market size of the Voluntary Carbon Markets is around USD300 million. It is estimated that this market will grow to reach USD50 billion by 2030 according to McKinsey.
The main sticking point preventing efforts from going further relates to establishing clarity around "double counting". This occurs when a country has overachieved relative to its carbon reduction targets and is able to sell the balance to another nation who have yet to achieve their own reduction targets. In so doing, double counting can occur when both nations claim they have met their reduction targets by counting the surplus or additional carbon reductions themselves.
CTX, which is licensed by the Monetary Authority of Singapore, is solving the problem of “double counting” through the launch of a new carbon neutrality token. With robust proprietary distributed ledger technology supporting the token, CNTs can provide buyers and issuers with an immutable and constantly updated record of the carbon performance of their tokens.
The sale of the first tranche of 5,000 carbon credits to the Hong Kong-based private equity firm Celadon Partners on the exchange demonstrates there is ample demand for voluntary emission reductions (VERs) which do not interfere with NDCs – something no other solution has been able to address.
Celadon Partners Managing Partner Donald Tang says: “We are very excited to be the first investor to transact CNTs on CTX. Beyond this step towards sustainability in our own private equity portfolio, we hope to continue catalysing innovations with CTX to lower the barriers to sustainability for corporates and investors everywhere.”
The CNT is asset-backed with the first issuance of carbon credits being generated by a wind project in Zhangjiakou. The project has been verified by the Foreign Economic Cooperation Office, Ministry of Environmental Protection of China (MEPFECO) and is registered with the national carbon registry, which holds to the same high standards as the European Union. Other global carbon credits programmes will soon be going live, demonstrating the stability and capability of the CTX platform.
Executive Chairman and Co-Founder of Cyberdyne Tech Exchange, Dr Bo Bai says: “We are delighted to have helped resolve one of the key challenges facing the voluntary emission reductions (VERs) market segment. When developing the CNT our focus was to create an effective solution that provides businesses with a trustworthy, high-quality offering, that gives them the assurance they need in knowing their investments are directly impacting global carbon reduction.
Not only is our platform regulated by the Monetary Authority of Singapore, our proprietary protocols and blockchain technologies, and our ability to source and authenticate quality global carbon offsets and sustainable development initiatives can give the carbon trading markets the confidence it needs to flourish.
Having been involved in and supported sustainable projects throughout my career, the CTX exchange is playing a key role in resolving the challenges faced by international carbon markets and is a direct and credible solution to reduce emissions.”
Vesper Token (VSP) now live on Bittrex Global Cryptocurrency Exchange
VSP – the token powering the Vesper ecosystem – is now available to trade on cryptocurrency exchange, Bittrex Global.
Vesper offers a suite of easy-to-use, yield-generating products that combine DeFi’s innovation and promise with the professionalism required to advance the sector. As Vesper’s core economic engine, VSP incentivises community participation and facilitates governance.
“Vesper’s listing on Bittrex Global provides an additional onramp for VSP and users interested in a platform that’s creating a shared surface area between DeFi and TradFi,” says Jordan Kruger, co-founder of Vesper Finance. “The Vesper community’s goal is to create a world where professionalized DeFi options are easier to access. This is one more step in that direction.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital AssetsGenesis executes first OTC trade of new bitcoin futures product with Akuna Capital
Genesis Global Capital has executed the first ever OTC block trade of a BTIC (Basis Trade at Index Close) transaction on CME Bitcoin futures with Akuna Capital, an options market maker specialising in derivatives market-making and sophisticated modelling.
A commonly used equities product, BTIC has now been made available for cryptocurrencies for the first time. The execution of this trade demonstrates new ways traditional finance participants and markets are adapting to meet the demand for crypto products and services.
“BTIC fills a hedging need for our counterparties who are benchmarked to the Bitcoin Reference Rate and we are proud to be the first firm to trade this pioneering product,” says Joshua Lim, Head of Derivatives at Genesis. “Genesis is committed to offering the most innovative products to our trading partners as the market matures.”
“This is the first time we’re offering BTIC for our cryptocurrency futures and we’re pleased Genesis is able to support and provide liquidity for BTIC on day one,” says Tim McCourt, CME Group Global Head of Equity Index & Alternative Investment Products. “This is another example of how we’re providing innovative solutions to clients who want to gain exposure to CME bitcoin and ether futures. BTIC enables market participants to more efficiently trade the basis while providing a regulated marketplace for real-time price discovery and enhanced trading precision for institutional participants who want to optimise holdings between the futures and spot markets.”
Genesis is a liquidity provider for CME Group for Bitcoin futures, Bitcoin options, Micro Bitcoin futures and Ether futures. In the second quarter of 2021, the Genesis counterparty base grew by 15 per cent, including the notable addition of large institutional investors looking to enter the crypto derivatives market for the first time, according to the Genesis Q2 2021 Market Observations Report. During Q2 2021, Genesis traded USD29 billion of spot volume, a year-over-year increase of 487 per cent, and USD8.5 billion of derivatives volume.
"As one of the first firms to trade bitcoin futures at CME Group, Akuna is excited to execute the first BTIC trade on CME Bitcoin futures with Genesis,” adds Trevor Bernard, Head of Digital Liquidity at Akuna Capital. “Akuna welcomes another avenue for the developing Bitcoin market to manage risk and express a view."
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital Assets Trading & ExecutionInstitutional investors stay cautious on crypto, as hedge funds ride bitcoin volatility
As hedge funds continue to ride out cryptocurrencies’ volatility, new industry research suggests larger institutional investors remain reluctant to pile into digital assets in any meaningful sense, despite the strong returns generated by managers this year.
Alternatives-focused software-as-a-service and data management firm Vidrio Financial surveyed global allocators and LPs - collectively representing more than USD100 billion in alternatives assets under management in the US and Europe - on their crypto investment plans.
The latest monthly ‘Vidrio Views’ survey found that 50 per cent of those quizzed reported zero exposure to any crypto currency or crypto-related currency investments. A further 33 per cent said they had no current exposure but were considering it as an investment option. Just 17 per cent had between 6-10 per cent exposure in their portfolios.
Cryptocurrency-focused hedge fund managers have generated a remarkable 254 per cent return year-to-date, according to Hedge Fund Research data.
HFR’s Cryptocurrency Index - which tracks the performance of a pool of hedge funds trading bitcoin or other digital currencies long and short across a range of strategies including arbitrage, event driven and momentum – scored a near-27 per cent return in August, its fifth double-digit monthly return so far in 2021.
But despite growing interest around crypto-related assets and digital coins, Vidrio said further adoption ultimately hinges on investors “becoming more comfortable and educated about the risks and structure” of crypto’s investment opportunities.
“While the craze of interest for crypto currencies and crypto related investment offerings persists to date, there are no meaningful examples of large institutional investors embracing this new asset class,” Mazen Jabban, Founder and CEO, Vidrio Financial, and Gygmy Gonnot, Managing Director and Head of Research, Vidrio Financial, said in their monthly commentary.
The survey – which included asset managers and insurers, outsourced chief investment officers (OCIOs), and family offices and investment consultants – also explored allocators’ future plans for crypto allocations, with the responses suggesting opinion remains splintered.
Some 17 per cent of investors surveyed intend to make allocations to cryptocurrencies “directly and equally”, while another 17 per cent believes currencies themselves are too volatile, but are mulling investments in crypto-related companies and infrastructure. One-third of those polled – 33 per cent - remain in ‘wait-and-see’ mode for the next 12 months, and another 33 per cent said crypto and crypto-related assets are “too volatile and not an appropriate fit” for their current allocation models.
The findings also show many institutional investors continue to lean heavily on their risk teams ahead of any allocation to crypto assets.
Quizzed on cryptos’ risk relative to other assets, some 50 per cent of respondents said the risk is too high for their portfolios, while 33 per cent are not overly concerned but are working closely with risk teams to determine the potential risks. Meanwhile, 17 per cent are not concerned, adding crypto and crypto-related assets are in line with the risk levels they have for other asset classes.
The findings come as bitcoin saw a fresh round of volatility this week. The world’s foremost cryptocurrency fell sharply on Monday, dipping below USD45,000 amid a broader sell-off of digital currencies, before rising on the back of a statement by Twitter outlining plans to add bitcoin payments to its Tips feature.
Meanwhile, hedge funds are continuing to build out their crypto capabilities.
Brevan Howard Asset Management, the high-profile global macro hedge fund giant founded by Alan Howard, is significantly ramping up its presence in this sector with the launch of BH Digital, a new division to manage cryptocurrency and digital assets. Earlier this month the firm appointed Colleen Sullivan, CEO and co-founder of CMT Digital, to lead its private and venture investment activities in crypto. In May, the Brevan Howard Master Fund said it would start allocating to cryptocurrencies.
Elsewhere, London-based Nickel Digital Asset Management, headed by ex-Goldman Sachs and JP Morgan portfolio manager Anatoly Crachilov, has seen its assets soar some 260 per cent this year to more than USD250 million.
The firm has generated gains across its range of cryptocurrency-focused strategies, with its flagship systematic market-neutral Digital Asset Arbitrage Fund in double-digit territory year-to-date.
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Investments Digital Assets Bitcoin Investing in Hedge FundsBroadridge appoints Global Product Manager for Derivatives Clearing
Broadridge has hired Mike Johnson as Vice President, Global Product Manager of Derivatives Clearing.
In his new role, Johnson will be responsible for the continual enhancement, growth and quality of Broadridge’s leading global cleared derivatives platform, and leveraging strategic client and industry partnerships. He will also be responsible for ensuring clients receive first class service and the support of its deeply knowledgeable market experts.
Johnson brings with him over 30 years of experience in financial services from Bank of America, including 15 years of experience in the exchange-traded derivative space and more than 10 years of experience in repo trading. During this time, Mike has become a champion of the front to back ownership model, driving the architecture of technology and operations infrastructure and providing solutions from trading and risk systems to post-trade books and records functionality.
Johnson was also the Global Head of Collateral Management and Business Development for Bank of America. He provided leadership and frameworks with strong governance processes, driving scalable client solutions, and consistently achieving strong financial results.
“We are very excited to be welcoming Mike to Broadridge,” says Danny Green, GM of Post-trade Solutions, Broadridge International. “His extensive experience and knowledge of the cleared derivatives space will enable us to continue delivering Broadridge’s industry leading solutions along with customer service of the highest standard.”