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Real-time QUODD Financial market data now available on Apex Platform
Apex Fintech Solutions (Apex) and QUODD Financial Information Services (QUODD), a business unit of Financeware, a NewSpring Holdings platform company, have announced a strategic data partnership to offer access to real-time market data feeds to deliver pricing information and Vendor of Record services.
Apex’s network of clients, which include online brokerages, institutional traders, traditional wealth managers, digital banks and wealth-tech providers, and consumer brands, is expected to benefit from QUODD’s comprehensive offering of market display data and Vendor of Record designation.
With a focus on providing cloud-based RESTful APIs, this partnership is built for digital forward businesses that seek to scale. Offerings from this partnership are designed to evolve as clients’ needs mature and can accommodate companies ranging from early-stage startups seeking a low-cost offering, to professional trading institutions requiring comprehensive real-time data.
“We are delighted to partner with QUODD to meet the financial market data needs of our diverse customer base and improve the investor experience,” says Dustin Kirkland, Chief Product Officer at Apex Fintech Solutions. “QUODD’s flexible licensing, affordable pricing and Vendor of Record capabilities enable us to seamlessly scale our solution set.”
“The future of fintech is being pioneered by companies who are leveraging the latest technology to provide a unique digital experience,” says Bob Ward, CEO of QUODD and Financeware. “We are proud to fuel the various market data needs for innovators like Apex and their clients who are enabling cutting-edge user experiences.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Services Research & AnalyticsBitfinex Derivatives to launch Sushi and Terra perpetual swaps
Bitfinex Derivatives has announced the launch of perpetual contracts for Sushi (SUSHIF0:USTF0) and Terra (LUNAF0:USTF0).
SUSHIF0:USTF0 and LUNAF0:USTF0 went live on 26 August at 16:00 PM CET. The contracts offer users up to 100x leverage and will be settled in tether tokens (USDt).
“We’re delighted to announce the addition of Sushi and Terra to the growing portfolio of perpetual swaps available to trade on the exchange,” says Paolo Ardoino, CTO at Bitfinex Derivatives. “We anticipate great interest in these products, particularly among funds and professional investors for hedging purposes and to manage risk.”
Bitfinex Derivatives platform and products are only available in eligible jurisdictions, and are exclusive to verified users.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital AssetsDeFi infrastructure project TheStandard.io adds two to advisory board
TheStandard.io, a DeFi infrastructure project which aims to provide a bridge between traditional physical investments and digital assets, has appointed two high-profile crypto industry figures to its Advisory Board – Dr Jane Thomason and Hartej Sawhney.
TheStandard.io issues liquidity to asset holders without selling the assets and makes inflation beneficial for savers, as loans effectively become cheaper to pay back. Users of participating vaulting facilities simply lock up their digital and physical assets in a smart contract which acts as collateral against loans that users can generate without any intermediaries: It will be a private Gold Standard 2.0 and can fundamentally change how people save and use their assets and money.
Thomason is a thought leader in technological innovation, fintech and blockchain for social impact. She was named by Forbes as a leader in Blockchain for Social Impact and is a published author. She holds a large number of academic and commercial positions and co-founded the British Blockchain and Frontier Technology Association.
"We live in an interesting time, with governments globally printing currency and therefore pushing massive inflation," she says. "Blockchain enables us to build a new decentralised financial system; with a new financial instrument backed by rare assets like gold and crypto, that protects value and allows people to borrow against their asset holdings, The Standard can fundamentally change how people save and use their assets as money.”
Hartej Sawhney pioneered the smart contract security auditing space in 2015. He founded Zokyo, a venture studio that builds, secures and funds crypto, DeFi and NFT companies, and also co-founded Hosho, which was ranked No1 Smart Contract security Auditor in 2019 by Forbes.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital Assets DeFi Moves & AppointmentsMaples advises on all Cayman Islands SPACs listed on Euronext in H1 2021
The London Corporate practice of Maples and Calder, the Maples Group's law firm, has advised on all Cayman Islands Special Purpose Acquisition Companies (SPACs) that have listed on Euronext Amsterdam so far this year.
The team, led by Jack Marriott Partner and head of the London Corporate practice along with Associate Christopher Oliver, continue to be selected to act as Cayman Islands counsel on SPAC IPOs as a result of the firm's market-leading experience and comprehensive capabilities in this area.
In its most recent role, the London team acted as Cayman Islands counsel for Crystal Peak Acquisition on its USD150 million initial public offering of 15,000,000 units and listing on Euronext, which included USD30 million in anchor investments. Earlier this year, the team advised Hedosophia European Growth on the Cayman Islands legal aspects of its SPAC IPO and listing on Euronext. These deals are the latest in a long line of public offerings, both in Europe and the United States, where the firm has been selected by clients to advise on SPAC IPOs and business combinations across a wide range of sectors.
As European markets predict an increase in listings on Euronext Amsterdam and the London Stock Exchange in the latter half of 2021, the firm remains well-placed to support with SPAC IPOs and business combinations. For over a decade, the firm has led on the majority of all Cayman Islands SPAC IPOs, having acted on the first-ever Cayman Islands SPAC listing on Euronext in 2008.
The Maples Group's unique ability to provide British Virgin Islands, Cayman Islands, Jersey, Irish and Luxembourg legal advice through its international law firm, Maples and Calder, in addition to its capacity to provide accountancy services, independent director services as well as ancillary governance and administrative services to SPAC-related entities through its fiduciary business, makes the Group the perfect choice for international businesses considering SPAC IPOs and business combinations in the US and Europe.
Blurring the boundaries between hedge funds and private equity within investor portfolios
Allocators are blurring the boundaries between the hedge fund and private equity sides of their portfolios, as once strictly segmented alternatives buckets begin to blend, according to investment firm Cambridge Associates.
Dan Aylott, Managing Director and Head of European Private Investments, at Cambridge Associates says that the distinction between hedge funds and private equity has become an increasingly “grey area”.
“Those parts of a portfolio are less distinct today than they were. Within Cambridge Associates, hedge funds don’t compete against private equity for the best ideas or vice versa, there’s a lot more overlap,” he commented.
The palette mixing of hedge and PE, has chiefly benefited those in the more illiquid private markets space, with some hedge fund management firms looking to broaden their appeal with the launch of more illiquid products.
Trudi Boardman, Hedge Fund Specialist at Cambridge Associates, said that although allocations to hedge funds had been broadly static overall, recent outflows from some hedge fund allocations have been directed into illiquid diversifiers or private credit opportunities.
She commented: “This makes a lot of sense for some strategies when looking at the underlying liquidity of the positions or the duration of the trades, it’s preferable for there to be a better asset liability match.
“It’s been a natural evolution of the industry as managers sought a closer match between their investments and fund liquidity terms while investors have looked at credit strategies and realised that they are actually better suited to sitting in draw down structures, rather than traditional hedge fund structures and have created allocations in their portfolios to reflect this shift.”
Boardman added that Cambridge Associates have seen many hedge funds launching private credit vehicles, and many hedge fund investors allocating to those private credit vehicles.
Cambridge Associates is an investment firm advising endowments, foundations, pension funds and family offices globally with an AUM of USD47 billion.
Boardman and Aylott advise clients in the EMEA region. Both have seen specific investment strategies
Increase in popularity over the last two years on both the hedge fund and private equity side, and even some new opportunities arise from the pandemic.
Within hedge fund investing, Boardman said many investors have made recent allocations to global macro, lower beta multi strategy and event driven funds. Distressed investing experienced inflows driven by the impact of the pandemic on global economies and markets.
Boardman said: “There was a lot of enthusiasm for distressed investing during this period, but the distressed opportunity set has actually been slower to emerge than managers and investors were expecting due to swift central bank action, the backstopping of hard-hit industries and the roll-out of effective Covid vaccines. Although results have been good over the last 15 months, they remain more compressed than initially expected.”
Aylott commented that he hasn’t seen any pulling back in terms of appetite for private market strategies. “If anything, we’ve seen an increased appetite as returns for private equity and venture capital have continued to be strong and robust,” he added.
He said that Cambridge Associates has a history of focusing on the lower middle and middle market where valuation and pricing is a little more attractive – and especially on sector-focused funds such as healthcare and technology, where managers have a deep domain expertise in the areas they focus on.
“These strategies have proven to be resilient and even benefitted from what’s happened in the last 18 months, and we think going forward they’re going to endure,” he added.
Cambridge Associate’s clients have demonstrated an increased interest in investing in venture and growth capital, especially in European managers, despite the challenges that come with accessing these smaller fund sizes. Aylott said that from his experience, clients who are able to invest smaller amounts, often with smaller portfolios and programmes, are more willing to allocate to venture capital.
Like this article? Sign up to our free newsletter Related Topics InvestmentsLiti Capital’s wrapped LITI lists on Bitcoin.com Exchange
Liti Capital’s wLITI token, a wrapped version of the Swiss company’s LITI equity token, has been listed on the Bitcoin.com. wLITI is trading with BTC and USDT pairs.
Liti Capital, a Swiss-based blockchain private equity fund specialising in raising capital for legal cases, is making waves in traditional investing by bringing litigation financing to the masses, an investment practice traditionally monopolised by hedge fund heavyweights and elite investors.
Danish Chaudhry, CEO of Bitcoin.com Exchange, says: “The Liti Capital team are providing an equity token which is the first of its kind, focused around easy-to-access private equity investment opportunities for basically anyone with the help of blockchain technology.
“We’re very excited to see how Liti Capital will continue to empower their vision, and gain further outreach with our outstanding community at the exchange.”
Jonas Rey, CEO of Liti Capital, says: “Listing on Bitcoin.com Exchange is an excellent opportunity for us, and a milestone we are proud of. We have full confidence that once the public discovers just how valuable the litigation assets we are able to purchase on behalf of LITI investors are and how powerful blockchain-backed private equity trading can be, that wLITI will become a very popular token indeed.”
Just last week on 19 August 2021, Liti Capital announced that it was funding a claim (www.binanceclaim.com) against Binance, which would enable affected individuals to pursue claims, including, if necessary, in arbitration, for compensation in relation to the exchange failing on 19 May 2021. This failure resulted in the trading accounts (including Futures, Margin, and Leveraged Token products) of at least 700 and potentially thousands of individuals being effectively untradeable for hours, causing traders to suffer losses that could exceed one hundred million dollars.
Litigation financing is the practice of bringing in investors to cover the cost of a lawsuit or arbitration in exchange for a portion of the profit. Litigation financing specialists, such as Liti Capital, purchase litigation assets for cases they deem to have a high chance of winning.
While litigation financing often requires an initial investment of USD500,000 to USD1 million from an investor, Liti Capital makes it accessible for anyone with as little as USD50. It does this by tokenizing shares in Liti Capital and paying out dividends to Liti Capital (LITI) equity token holders when a case in Liti Capital’s portfolio is won.
Liti Capital has already secured a healthy case portfolio with its largest case potentially worth more than USD1 billion when it finally settles. Cases like these, which tend to be commercial rather than consumer or personal lawsuits, usually target large-scale corporate disputes valued at more than USD10 million. While they could take years before a settlement is reached, successful litigation funders can expect to pocket between three and five times their initial investments, according to estimates by litigation finance expert Steven Friel.
wLITI is an ERC-20 token that is the wrapped version of the LITI equity token. Launched on 29 June, 2021, the wLITI token is suitable for trading on exchanges such as Bitcoin.com, whereas the LITI token is only available through liticapital.com after meeting KYC requirements. Liti Capital uses the blockchain to manage its share registry. Development of its own blockchain-based case management tools is on its roadmap.
Switzerland-based Liti Capital creates wLITI at a LITI token buyer’s request via Liti Capital’s app or website, which converts the LITI to wLITI at a 1:5000 ratio. The tokens will always maintain this ratio. The buyer is then able to trade their wLITI freely. Liti Capital does not directly sell wLITI.
LITI is a true digital share of Liti Capital that has voting rights, pays dividends and is protected under Swiss law. LITI is purposely not designed to be on exchanges at this time.
Both tokens represent Liti Capital, whose mantra is “private equity for all.” Liti Capital works exclusively in a single form of private equity – Litigation Finance, also called third party funding. This asset class has remained almost entirely exclusive to hedge funds and venture capitalists since its inception several decades ago. Litigation Finance is the practice of financing all or part of a legal case on behalf of a plaintiff for an agreed upon percentage of the court award.
Once Liti Capital purchases a portion of ownership of a case, it provides capital that can be used in many ways: legal fees, case management and strategy, expert witnesses, intelligence work and whatever else is needed to give the plaintiff the best chance of winning the case and collecting the award. The portion owned by Liti Capital becomes a “litigation asset” that backs the LITI token.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital AssetsSRAX partners with S3 to integrate short interest data into Sequire platform
SRAX has collaborated with S3 Partners, a financial data and analytics provider, to incorporate short interest and securities finance data into the Sequire platform.
Sequire is an investor intelligence and communications platform where companies can track their investors’ behaviours and trends through data, and use those insights to engage current and potential shareholders, or any desired audience, across multiple channels. While Sequire’s proprietary data sets provide issuers insights into who is buying their stock, at what volume, and more, the addition of short interest data enhances the value for Sequire customers.
The institutional investment community has long used short interest data as an indicator to gauge investor sentiment for a company’s stock price. S3 wants the corporate community to know that they’ve created a version of their product that gives them the data and tools they need to understand how investors are viewing their company's performance. On a mission to constantly add value for their clients, SRAX has teamed up with S3 Partners to incorporate their short interest and securities finance data into the platform.
“We are excited to offer a fully integrated user experience to companies on the Sequire platform that allows them to access and utilise S3’s data and insights to better engage with current and potential shareholders,” says Palak Patel, Chief Revenue Officer of S3 Partners. “This collaboration helps to level the playing field for corporate users by providing them with the same timely and quality information that many of their investors use to express views on their company’s share price.
“We look forward to partnering with SRAX to help their customers understand with more clarity the short interest around their listed equity as they navigate the public markets.”
S3 short-interest data provides transparency to all sides of the stock loan market with the only independent and unbiased bid, offer, and last rates for securities financing. The addition of this valuable data brings even more knowledge and power to the hands of Sequire users.
“Understanding short data is an integral part of understanding what is going on in any company’s stock. This feature is one of the most requested features from our clients and we are excited to launch this into the Sequire platform,” says Christopher Miglino, Founder and CEO of SRAX.
Like this article? Sign up to our free newsletter Author Profile Related Topics Services Research & AnalyticsColumbia Threadneedle adds to leadership team
Columbia Threadneedle Investments is to appoint Richard Watts, Stewart Bennett and David Logan to its expanded leadership team following the completion of the acquisition of the BMO Financial Group’s EMEA asset management business, expected in the fourth quarter of this year.
Completion of the acquisition and senior leadership appointments remain subject to the receipt of applicable regulatory approvals.
Watts will become Chief Investment Officer, EMEA. He will oversee Columbia Threadneedle’s investment function in the region, building on the firm’s strong, established approach and capabilities. Watts is currently Chief Investment Officer for BMO GAM. Last month Columbia Threadneedle announced the planned transition of its current EMEA CIO, Davies, who will succeed Global CIO Colin Moore when he retires from the firm in January 2022. Together, Davies and Watts will provide continuity for the investment professionals and clients of both firms, as well as proven leadership of investment teams. Watts will report to Davies.
Bennett will be appointed to the new role of Global Head of Alternatives, creating a global capability that will manage more than USD47 billion in alternative assets on completion of the acquisition. In this role Bennett will lead Columbia Threadneedle’s expanded real assets business (including real estate businesses in the UK, Europe and US and an infrastructure business), private equity business, the US-based Seligman hedge fund business, Thames River Capital (real estate securities) and Pyrford (absolute return, international and global equities). Bennett is currently Global Head of Alternatives at BMO GAM, a role he has held since joining the business in 2019.
Logan will be appointed Global Chief Operating Officer, a new role responsible for delivering operational excellence and partnering with regional heads and our investment leadership to develop and implement annual business change plans and the firm's long-term strategic agenda. He will also drive continuous improvement regarding risk and controls and champion the firm’s risk management culture. Logan has held a variety of roles at BMO GAM and its legacy firms, including Chief Financial Officer, Chief Operating Officer, EMEA and latterly Global Head of Distribution. With Logan taking on this new role, the majority of his BMO Distribution responsibilities will transition to Michaela Collet Jackson, Head of Distribution, EMEA at Columbia Threadneedle, post completion of the acquisition and subject to regulatory approval.
Bennett and Logan will report to Ted Truscott, Chief Executive Officer.
Truscott says: “I’m excited to welcome Richard, Stewart and David to Columbia Threadneedle’s expanded leadership team. They will add to our strong roster of experienced, client-focused asset management leaders and help position the firm to meet the current and future needs of investors around the world.
“Our acquisition of BMO’s European asset management business adds complementary strengths and capabilities in strategically important areas, and these appointments demonstrate the compatibility of our businesses. Richard has been integral to the growth and success of BMO GAM’s investment proposition, including its leadership in responsible investment and solutions, reflecting his strategic vision and clear understanding of client needs.
“The establishment of a global alternatives business is an important milestone for Columbia Threadneedle. We have been adding to our alternative capabilities over the past several years in response to increasing demand from our clients for less liquid, diversifying assets, both as standalone strategies and within bespoke solutions. With Stewart’s experience and leadership, we see great potential to develop further this offering.
“Operational excellence is foundational and in the new role of Global Chief Operating Officer David will bring broad knowledge and deep technical and client experience to help deliver our change agenda and ensure a robust, risk-focused environment and a culture of operational excellence as we bring our organisations together over the next several months and beyond.”
Hedge funds and private equity improve ESG focus yet face differing reporting and monitoring challenges
Hedge funds and private equity are both improving their transparency over ESG. However, while on the private equity side, ESG is more seen as an investment opportunity, complexities remain on the hedge fund side around issues of reporting and shorting, according to Cambridge Associates.
Trudi Boardman, Hedge Fund Specialist at Cambridge Associate said that many hedge funds are still in the earlier stages of introducing ESG policies and processes, and that “there’s still a long way to go.”
She commented: “The ESG area is still very much a work in progress on the hedge fund side. There are challenges in terms of how to measure existing exposures, for example whether to count shorts as an offset and how to account for derivatives.
"There are monitoring challenges that exist particularly outside equity-oriented strategies. Though there is certainly a positive trend that we anticipate will continue, it does require active engagement from investors to convey the importance of ESG considerations.”
Boardman explained that bringing ESG considerations into practice is a simpler case for private equity, where impactful solutions can be more clearly identified.
She added: “There are very few hedge funds focused specifically on identifying positively impactful solutions – more are probably willing to avoid more ESG-exposed industries through exclusions– while in the private markets space, the nature of the asset class means that involvement in impactful businesses can be a lot more significant.”
A survey conducted by Cerulli Associates last month revealed that though 73 per cent of hedge fund managers surveyed prioritise incorporating ESG considerations into their investment process, the AUM of dedicated ESG liquid alternative funds represent only 2 per cent of total industry AUM.
Dan Aylott, Managing Director and Head of European Private Investments at Cambridge Associates, said that ESG is a big focus of due diligence on the private equity side, and something his team continues to monitor once clients have invested.
PwC’s 2021 Global Private Equity Responsible Investment Survey found that 65 per cent of PE firms that responded have developed a responsible investing or ESG policy and the tools to implement it.
Aylott added however that monitoring remains difficult especially around climate and emissions issues. “It’s still very challenging to get that right, to help clients understand those exposures in their private market portfolios. It’s going to take time overall, there’s definitely quite a dispersion at the moment between those managers that understand it very well and those that are only just starting to think about it,” he said.
Like this article? Sign up to our free newsletter Related Topics ESG & Responsible InvestingSuntera Global acquires Reference Financial Services SA (Luxembourg)
Suntera Global has continued its growth strategy with the acquisition of Reference Financial Services SA (Luxembourg), a boutique fund administration and corporate services firm.
The acquisition, which is subject to appropriate regulatory approvals, adds to Suntera Global’s client base while strengthening its presence in EU markets. The move supports its growth strategy and complements its office network in Jersey, Cayman, Bahamas, Isle of Man, Malta, Hong Kong and Switzerland.
Founded in 2003, Reference Financial Services SA (Luxembourg) (Reference) is a provider of boutique fund administration and corporate services to Luxembourg based entities. With headquarters in Luxembourg, the firm has a strong team with long standing industry experience providing services to client entities.
Reference is regulated by the Commission de Surveillance du Secteur Financier (CSSF). It is authorised as a Professional of the Financial Sector (PSF) in Luxembourg and, in addition, Reference is an accredited maritime manager supervised by the local maritime authority, the ‘Commissariat aux Affairs Maritimes.’
Reference’s principal activity is the provision of boutique fund administration and corporate services providing a full suite of services including central administration, corporate administration, accounting and tax compliance, family office, directorship, company secretarial, domiciliation and incorporation. They also assist in the incorporation of Luxembourg funds and companies and in their liquidation. Reference has a global client base active in private equity, real estate, intellectual property, energy trading, e-commerce, wealth management, advisory services and maritime and ship financing.
Olivier Jarny & Cedric Raths, co-owners and managing partners at Reference, says: 'Our decision to join Suntera Global is an exciting move designed to provide our clients with access to a depth of additional expertise in many other key markets where we are not currently represented, while maintaining the same high quality level of personal service but with a shared focus on responsibility and ambition.'
Commenting on the acquisition, Paul Mundy, Managing Director of the Funds Division at Suntera Global, says: “Reference is an ideal fit for Suntera Global since they closely match our own service ethos and provide a tailored, personal, bespoke offering delivered by a senior management team with years’ of experience managing clients' needs in Luxembourg. The acquisition further fuels our strategic expansion plans, provides us with an additional key footprint within EU markets and enhances our client service proposition.’
Like this article? Sign up to our free newsletter Author Profile Related Topics Deals & Transactions Acquisitions Finance & Insurance ServicesHedge fund short sellers rocked by Sainsbury’s share price surge amid Apollo takeover talk
Hedge funds betting against Sainsbury’s have been left counting the cost of their negative wagers this week after the FTSE 100-listed supermarket giant saw its share price rocket on the back of fresh takeover rumours.
BlackRock Investment Management, Marshall Wace, and the Pelham Long/Short Master Fund are among the high-profile hedge funds positioned short against the UK supermarket giant, according to regulatory disclosures made to the UK Financial Conduct Authority.
The UK’s second-largest grocery chain initially saw its share price rocket by some 15 per cent on Monday following weekend media reports that US private equity firm Apollo Global Management was preparing a potential GBP7 billion (USD9.6 billion) swoop for the retailer.
Though Sainsbury’s value has since pegged back slightly, it remains up more than 10 per cent this week. Wednesday’s 321p is approaching a near-three year high for the retailer, which only last month was found to be the second most-shorted company among London-listed stocks, according to GraniteShares data.
FCA disclosures show BlackRock has a 2.02 per cent net short position, Pelham is sized at 1.28 per cent net short, while Marshall Wace is 0.65 per cent. In the past, well-known brand name hedge funds including Citadel, AHL, and GLG Partners held bearish bets against the company.
Earlier this summer, short sellers took a hit after the company surged on the back of surprisingly strong Q1 sales numbers, which prompted it to revise its profit outlook upwards.
New York-based Apollo – which is also understood to be eyeing a consortium bid for rival retailer Morrison’s alongside Fortress Investment Group – is one of several PE giants said to be weighing up a bid for Sainsbury’s.
Along with Tesco and Asda, Sainsbury’s and Morrisons comprise the UK’s ‘Big Four’ supermarkets that dominate the grocery sector. Sainsbury’s is seen as a particularly attractive target due to its extensive property portfolio in the southeast of England.
Like this article? Sign up to our free newsletter Related Topics Investments Long-short investingSterling Trading Tech releases new risk and margin product
Sterling Trading Tech (STT), a specialist in technology solutions for real-time risk management and margin calculations for equities, equity options, futures, and options on futures, has released a custom house policy builder in the Sterling Risk & Margin product line.
This new application provides advanced analytics as RaaS (Risk-as-a-Service) utilising quantitative and big data techniques.
The new custom house policy builder functionality allows users to construct and manage their own risk or margin policy using any combination of risk measures, including multiple price and volatility scenarios, an OCC TIMS estimate with various add-ons and VaR (Value at Risk). This functionality replaces the need for hard-coded policies and allows users to create, edit and manage multiple policies from the feature-rich builder as well as Sterling’s extensive API library.
“Clients often need to adjust their custom house policies. We saw a need in the marketplace for them to be able to self-manage them when required versus having to request a scope of work and development request to implement the requested changes,” states STT Managing Director of Business Development, Andrew Actman. “We’re thrilled to be the first in the industry to build this, it will cut significant time and costs for firms.”
Additional risk add-ons include concentration, liquidity, market cap and stock price-based adjustments. The custom house policy functionality can also be utilised for ad-hoc custom risk metrics to assess risk and margin impacts in volatile markets along with exchange standard methodologies.
“This is a highly sophisticated piece of technology that offers flexible functionality allowing the inclusion and combination of almost any risk factor or offsetting logic,” says Ravi Jain, STT Director of Risk & Derivatives. “This application allows firms to quickly update their risk policies.”
Hedging activity stays lively, despite volatility falling in August
Hedging activity remains robust despite overall market volatility levels falling during August, with sustained demand among hedge funds for volatility products holding up in recent weeks, according to new analysis by Man Group.
In a market commentary on Tuesday, portfolio managers at the London-headquartered publicly-traded hedge fund giant said relatively low realised volatility, coupled with a flood of short-dated options from a number of volatility sellers, helped drive the S&P 500’s weekly implied volatility to 6.6 on 13 August – its lowest level since 2017.
The latest weekly ‘Views From The Floor’ commentary rounding up Man portfolio managers’ perspectives explored recent call and put option activity, noting how high hedging flows have puts at relatively expensive levels.
“Despite short-dated at-the-money implied volatilities falling, hedging activity – as determined by equity skew – has been very robust,” they explained. “Skew is a measure of the implied volatility of out-of-the-money puts versus as-the-money or out-of-the-money implied volatility. The higher the skew, the more demand for calls or, potentially, higher supply of calls. Both are effectively hedges, with call sales capping upside and put buys capping downside.”
Meanwhile, certain factors – such as Value, Size, and Momentum – and sectors, particularly small-cap stocks, have continued to see volatile movements, even as S&P 500 volatility has remained comparatively low.
“One-month implied volatility on the Russell 2000 versus the S&P 500 reflects the very high realised volatility of small-cap stocks since the pandemic began, but also the expectation that it won’t normalise any time soon,” they said.
This suggests investors expect certain factor volatility to remain “much higher than for the broader market.”
However, Man PMs cautioned that not all asset classes are seeing hedging or higher demand for volatility products, noting that implied volatility on credit indices remains near lows.
“Since the Federal Reserve announced programmes that could buy credit in dislocations, equity implied volatility has persistently stayed at relatively high levels, compared with credit volatility.
“While this may imply that market expectations are for smaller dislocations in credit given Fed support, we believe that those expectations miss a whole range of negative outcomes ranging from impacts of inflation, tapering and potential rate hikes to solvency and downgrade issues in the next crisis.”
Like this article? Sign up to our free newsletter Related Topics CommentWhy this metals and mining-focused hedge fund is preparing for renewed market jitters
As global economies remain finely balanced between reopening and containing Covid-19 variants, metals and mining-focused hedge fund Delbrook Capital is positioning its portfolio for fresh market volatility up ahead.
The Vancouver-based firm’s long/short equity-focused strategy, the Delbrook Resource Opportunities Master Fund, scored a 3 per cent gain in July, partially recovering from the previous month’s 4.4 per cent slide, bringing its year-to-date return to 31 per cent. Its investment universe spans a range of commodities including gold, silver, platinum and palladium, as well as base metals such as copper and zinc, industrial metals including iron ore and coal, and energy metals like lithium and uranium.
The strategy – which combines elements of relative value, event driven and opportunistic investing with bottom-up stock-picking – successfully capitalised on recent second quarter earnings, profiting from high conviction long bets on Ontario-based steel company Stelco Holdings and Toronto chemicals manufacturer Neo Performance Materials in particular, both of which traded higher last month.
But in an update this week, founder, CEO and portfolio manager Matthew Zabloski warned precious metals stocks are continuing to struggle, facing valuation pressure despite commodities prices remaining range-bound.
He also sounded a note of caution on the broader macroeconomic picture, as economies continue to contend with the spread of Covid variants.
“We believe precious metals equities are in the early stages of an accelerating consolidation theme, with high-quality mid-caps being acquired by larger operators needing to backfill depletion,” he observed of the current investment landscape. “We predict this consolidation theme is unavoidable and is in the best interest of shareholders.”
Looking ahead, the firm is repositioning the portfolio in anticipation of renewed market jitters.
Despite improved global growth, Zabloski said it is “prudent to proceed with a level of caution” despite the firm’s broadly constructive outlook on materials.
“We fully anticipate the gradual easing of monetary policy to begin in the coming weeks, we disagree with the timing and see increased market volatility as a result.
“To that end, we have decreased net long exposure and increased portfolio level hedging and single name equity shorts.”
Like this article? Sign up to our free newsletter Related Topics Commodities & ResourcesDigital asset hedge fund manager Nickel Digital highlights strong potential growth in the UK
London-based Nickel Digital Asset Management (Nickel), Europe’s largest regulated digital assets hedge fund manager founded by senior traders and investment professionals formerly from major financial institutions including Goldman Sachs and JPMorgan, says the UK is one of the most attractive markets for hedge fund managers focusing on crypto and digital assets, as new research reveals potential for strong growth in the country.
Nickel’s clients include institutional investors, global wealth managers and ultra-high net worth individuals from around the world.
Nickel Digital recently commissioned a survey with 23 institutional investors and wealth managers in the UK who collectively oversee $66.5 billion in assets and who currently have some exposure to digital assets. The survey revealed that six of those interviewed expect to dramatically increase their exposure to cryptoassets between now and 2023, and another 11 who said they will also add to their exposure.
The three main reasons given for greater allocation to digital assets is the structural long-term capital appreciation prospects of cryptoassets – the view cited by 16 of the 23 UK-based professional investors. This is followed by nine who said having some exposure to cryptoassets, they have become more comfortable and confident in how the asset class works and the infrastructure around it, and the same number (nine) who said it was because of the improving regulatory environment.
However, the survey also identified several hurdles to investing into cryptoassets. Some 16 of the 23 UK based professional investors interviewed cited concerns about the relative size of the cryptoasset market and its liquidity as an issue, and the same number cited a lack of transparency in the market. Some 15 of the 23 UK based professional investors said concerns over custodial services for cryptoassets was a hurdle in terms of investing in the asset class, and 15 of those interviewed also said this about market volatility.
Nickel Digital’s funds have delivered strong performance despite recent crypto market corrections with its flagship Digital Asset Arbitrage Fund posting record returns in April and May, the months of intense selloff in the Bitcoin market. The fund was up +4.1 per cent in April and +2.6 per cent in May, in the face of Bitcoin dropping more than 40 per cent from April’s highs, taking H1 2021 performance to +12.6 per cent with a Sharpe of over 4, comfortably outperforming gains of 2.5 per cent for an average hedge fund in a closely watched HFRX Equity Market Neural Index, its closest market-neutral benchmark.
Anatoly Crachilov, CEO and Founding Partner of Nickel Digital, says:“Despite the recent correction in the crypto market, our survey confirms there is an ever-increasing appetite for this asset class among professional investors, willing to take constructive longer-term view on this asset class.
“We are glad to see increasing adoption of digital assets by many professional investors in the UK. We would be honoured to help forward-looking investors understand and navigate this nascent market by sharing our multiyear financial experience, originated in major Wall Street banks and now successfully applied to crypto ecosystem over the last few years.”
Fiona King, Nickel’s Head of Institutional Sales, says: “We are looking to address many of the concerns investors might have, not least the high volatility of crypto market. To that end, the recent performance of our market-neutral arbitrage fund demonstrated its ability to protect capital, as well as to deliver consistent and repeatable returns during turbulent times, such as April and May 2021.”
Henry Howell, Nickel’s Head of Business Development, adds: “Security of clients' assets is paramount at Nickel. We deploy independent institutional-grade custody models in partnership with US-based Fidelity and UK-based Copper. using a range of sophisticated cryptographic solutions, including distributed private keys and MPC (multi-party computation) vaults. The approach is based on air-gapped, multi-signature, cross-organisation setup, thus mitigating a “single point of failure”, typically associated with self-custody of crypto assets. In our setup, the join control over fund assets is retained by independent fund administrator and fund custodian at all times.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital Assets Surveys & researchDigital asset investment products snap six weeks of outflows
Digital asset investment products returned to positive inflows last week following a run of six weeks of out flows' according to the latest Digital Asset Fund Flows report from CoinShares.
Positive price action in recent weeks has now pushed total assets under management (AuM) to USD57.3 billion, the highest since mid-May.
Solana, a competitor to Ethereum, saw the largest inflows of any digital asset last week totalling USD7.1 million.
Ethereum saw minor inflows totalling USD3.2m last week along with other altcoins such as Cardano, Litecoin and Polkadot which saw inflows of USD6.4 million, USD1.8 million and USD1.1 million respectively.
Bitcoin saw its seventh straight week of outflows totalling USD2.8m.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital AssetsTradeweb appoints new Global Head of Compliance
Tradeweb Markets, a global operator of electronic marketplaces for rates, credit, equities and money markets, has appointed Devi Shanmugham as Global Head of Compliance, effective 16 August, 2021.
Shanmugham is responsible for continuing to foster Tradeweb’s culture of compliance and further developing the company’s relationships with regulators around the world. She reports to Scott Zucker, Chief Risk and Administrative Officer.
“With a network that includes clients in more than 65 countries and regulated trading platforms in North America, Europe and Asia, Tradeweb plays an increasingly important role as global markets become more electronified,” Zucker says. “Devi brings with her a breadth and depth of experience in some of the world’s most complex financial markets, and we are delighted to have her as part of the Tradeweb team.”
Shanmugham joins Tradeweb from Bloomberg LP, where she was Chief Compliance Officer for Bloomberg Swap Execution Facility (SEF). Prior to joining Bloomberg in 2015, she was Assistant General Counsel at GFI Group and Assistant General Counsel at JPMorgan Chase Bank. Ms. Shanmugham spent the first decade of her career representing corporate clients for: Harris Beach PLLC; Schiavetti, Corgan, Soscia, DiEdwards & Nicholson; and Hughes Hubbard & Reed. She earned a BS in cellular and molecular biology and psychology from Tulane University and a JD from Emory University School of Law.
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & Appointments“So far, so good”: Quant start-up TrueRisk Capital aims to make a splash with all-weather approach
Los Angeles-based TrueRisk Capital is a newly-established fully-systematic CTA manager which trades a range of algorithm-based options and futures strategies developed by co-founder and chief quant Rito Bhattacharyya over the course of almost nine years.
Having launched a separately managed account managing internal money in July, the firm is preparing to roll out its first strategy, the TrueRisk Market Volatility Fund, later this month.
TrueRisk represents the start of founder Bhattacharyya’s own direct management of client assets and application of his models, having earlier worked as a consultant for several hedge funds, either as a chief quant or head of quantitative research, as well as licensing models to more than a dozen asset managers globally.
In 2015, Bhattacharyya set up TrueRisk Labs, a data and machine learning signals vendor for investment managers. He is also a founding member and faculty member of WorldQuant University, the financial engineering educational programme established by former Millennium Management statistical arbitrage portfolio manager Igor Tulchinsky.
TrueRisk was launched in May with USD4 million of internal capital, around USD1 million of which is already up and running in a separately managed account that began trading in July.
Now, the firm is preparing to launch its main strategy, the TrueRisk Market Volatility Fund, later this month, with an initial USD2.5 million in assets. The volatility income strategy focuses predominantly on equities markets, though the model can also adapt to broader institutional investor interest through a fixed income version.
Meanwhile, the remaining USD500,000 of assets will be used to launch a separate managed account for a systematic US equity long/short strategy, to be rolled out before the end of the year. That strategy will focus on US publicly traded equities with a market cap of USD1 billion or more, using machine-learning algorithms that take company information and market sentiment information, social signals.
All-weather approach
The firm’s main TrueRisk Market Volatility Fund is built around three algorithm systems, and offers what CEO, CIO and co-founder Kaushik Saha describes as an “all-weather return stream” that trades across “more scenarios more robustly” than typical managed futures strategies.
Saha, who has more than 25 years’ investment experience, met Bhattacharyya at Hercules Investments, where he had led the design, implementation and positioning of the firm's liquid alternatives strategies.
Having started his career in 1997 within Freddie Mac’s portfolio group, building stochastic valuation models for the internal pricing valuation of mortgage purchases, Saha later held quant management roles at Barclays Global Investors, NewFleet Asset Management, and Black King Capital, where he had been co-founder and CIO.
“What's unique about this strategy is that it is made up of three separate algo systems,” Saha tells Hedgeweek.
Dubbed ‘Differential Evolution Optimisation’, the complex three-system algorithm combines to configure the option strikes and entry and exit parameters for the investment portfolio.
“Our strategies are quantitative, systematic, fully-automated, including trade strategy generation, allocation, risk management, even trade execution – we have both manual and automated options to implement trade executions,” he explains.
The first system implements a so-called ‘broken wing butterfly’ options trading model, harvesting a return premium within a definitive range around current index prices. A second system built around the ‘iron condor model’ – comprising one long and one short put option, two calls (one long and one short), and four strike prices – offers wider bounds, so that while the average return may be lower, it offers a wider range of trading opportunities it can remain profitable in.
“It also has a directional kicker in case the index gains some modest momentum in one direction or the other, and the local direction will introduce some alpha,” Saha says, adding that system two serves as a counterbalance to system one, with both systems being short volatility.
“What that means is it enters the trade configuration at a certain level of volatility measured in the VIX, and if volatility spikes after the trade is entered, then the trade will suffer from that volatility spike, and we’ll have less targeted gains to make as a result,” Saha says.
To address this, the strategy uses a third system, which implements symmetrical calendar spreads that offer positive vega and offsets any losses in systems one and two. If there is a sharp move in the index, coupled with a spike or rise in volatility, system three will kick in and help counterbalance systems one and two.
A viable alternative
Saha and TrueRisk’s chief operation officer Vishal Olson also discuss on some of the challenges and opportunities of launching a new strategy in the midst of the coronavirus pandemic, and reflect on the evolving investor sentiment towards quantitative funds.
Olson recalls how many fully-systematic so-called “black box” strategies had traditionally been frowned upon by institutional investors some 15 years back. But that cautious stance has shifted in recent years as managed futures strategies gathered momentum, he observes.
“Over the last decade, it has become obvious that the strategies that are more quantitative, or 100 per cent quantitative, and which remove the human element, or the discretionary element, from decision-making are much more viable than discretionary volatility strategies, especially during crisis moments or fat-tail events,” Olson tells Hedgeweek.
Prior to TrueRisk, Olson – who has some 15 years’ market experience – co-founded Holson Alternatives, a third-party marketer aimed at servicing, institutional investors and funds of funds, having earlier held a number of consultancy roles performing due diligence on CTAs, hedge funds, and funds of funds.
Red flags
He notes that certain discretionary short volatility strategies were rocked by the VIX “explosion” in February 2018, as well as the March 2020 market maelstrom at the outset of the Covid crisis, which saw US equities tumble some 35 per cent in a far shorter timeframe than ever before, later rebounding at equally-rapid speed.
“The strategies that have tended to survive and make it through those fat-tail risk events were either a hundred per cent quantitative or mostly quantitative,” Olson adds, while Saha suggests, that in his view, trend-following or equity volatility-based strategies with discretionary elements herald “all sorts of red flags”.
Noting how automated trading has made markets move faster than ever before, with assets and sectors snapping increasingly-closer to the edge, Saha draws an analogy between sharp pencils and broad brushes when discussing the relative merits of systematic versus discretionary investing.
“If you’re using a sharp pencil, you’re recomputing minute-by-minute, second-by-second, and arriving at precise numbers to make decisions on. But once you introduce a discretionary element, you’re talking more in terms of views and opinions, and you’re using a broad brush, instead of the sharp pencil,” he explains.
“Once that happens, you’re missing, say, two of the four decisions that you could have taken, because you’re happy with the two you have made, and you decide to forego the other two. Or two haven’t gone in your favour, and so the loss from those two trades is influencing your view on the next two trades and so you step away.”
The model is run at a leverage ratio that institutions are comfortable with, Saha says, adding that such institutionally-guided leverage allows the strategy to target returns averaging in the low-20s. The separately managed account – which has been in operation for just over a month – is already generating positive returns, largely due to volatility remaining range-bound, he adds.
“Some managers may often try and use up as much margin available to pump their returns while the going is good. Our systems are well-designed to extract the max out of these options,” he continues.
“Rising markets are a like a rubber band which can snap back, so similarly, when volatility gets too low, one has to be mindful that sudden shocks can cause volatility spikes that are higher since they are starting from a lower level.
“We haven't seen that in any appreciable way. We have our three systems, with the third system that will counterbalance those potential vol spikes, so we can breathe a bit easier. It’s been so far, so good.”
Like this article? Sign up to our free newsletter Related Topics Funds InvestmentsCboe Futures Exchange to list AMERIBOR Term-30 Futures on 13 September
Cboe Global Markets, a provider of global market infrastructure and tradable products, is to launch futures on the AMERIBOR (American Interbank Offered Rate) Term-30 interest rate benchmark.
The new futures are expected to be available for trading on Cboe Futures Exchange, LLC (CFE) on business date Monday, 13 September, 2021, subject to regulatory review.
The AMERIBOR Term-30 benchmark, disseminated by the American Financial Exchange (AFX), is designed for financial institutions in need of forward-looking short-term interest rates as the planned cessation of LIBOR approaches. The benchmark is designed to capture wholesale funding costs for American financial institutions over a thirty-day period at a specific moment in time.
AMERIBOR Term-30 futures (AMT1 futures) will be cash-settled and are designed to reflect market expectations of the level of the AMERIBOR Term-30 benchmark rate, which is used in the determination of the final settlement value of the applicable AMT1 futures contract. Cboe Futures Exchange plans to initially offer futures on the 30-day term rate, followed later this year by futures on the AMERIBOR Term-90 benchmark rate, subject to regulatory review.
The AMERIBOR Term-30 benchmark has a credit sensitive element and represents a forward-looking interest rate, making it comparable to One-Month LIBOR, but derived in a transparent and representative fashion and based upon actual financing transactions. As such, the benchmark is expected to serve as a "plug-in and play" replacement for One-Month LIBOR.
"We are pleased to further collaborate with AFX and provide market participants with the tools they need to help ease their transition away from LIBOR," says Michael Mollet, Vice President, Futures at Cboe Global Markets. "We expect market participants, especially banks who consider the AMERIBOR index representative of their true cost of funding, will find the new futures to be particularly well-suited to manage interest-rate risk on loans or execute interest-rate trading strategies."
Banks and other financial institutions may use AMT1 futures in connection with hedging their variable short-term funding costs and interest rate risk. Proprietary trading firms may use AMT1 futures in connection with hedging their exposure to other interest rate derivatives or to conduct trading strategies involving AMT1 futures on the one hand and other interest rate derivatives on the other hand, such as swaps based on the AMERIBOR Term-30.
"AMERIBOR Term-30 is the result of extensive research, testing, analysis and consensus-building to provide the marketplace with an innovative alternative to One-Month LIBOR," says Dr Richard Sandor, Chairman and CEO of the American Financial Exchange. "We are excited to further expand our suite of offerings with Cboe to include futures on the AMERIBOR Term-30 benchmark and to deliver more choices so that market participants can use the products that best suit their trading needs."
Like this article? Sign up to our free newsletter Author Profile Related Topics Markets Trading & ExecutionPGIM Fixed Income adds global investment strategist based in London
PGIM Fixed Income, a global asset manager offering active solutions across all fixed income markets with USD954 billion in assets under management, has hired Guillermo Felices as global investment strategist in London, effective immediately.
Felices will work under Gregory Peters, PGIM Fixed Income managing director and head of multi-sector and strategy.
PGIM Fixed Income is part of PGIM, the global investment management business of US-based Prudential Financial, Inc (PFI) (NYSE: PRU) and one of the world’s top 10 asset managers with more than USD1.5 trillion in assets under management.
Felices joins from BNP Paribas Asset Management where he was global head of investment strategy and a member of the multi-asset investment committee and helped oversee the firm’s multi-asset portfolio asset allocation. Previously he was the Head of Asset Allocation Research (Europe) at Barclays and before that a Senior Macro Strategist at Citi. He started his career at the Bank of England where he was a Senior Economist in his last role. He holds a PhD and an MA in Economics from New York University.
Peters says: “As our European client base continues to grow, PGIM Fixed Income is expanding our investment team with the local and regional expertise to navigate the European and global credit markets. Guillermo’s wealth of experience grounded in fundamental research and portfolio management will prove critical in identifying opportunities, managing risk, and driving alpha in the current low-rate environment.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & Appointments