Mon, 12/12/2011 - 18:22
Interview with Mike Rosen, senior managing director, Concept Capital Markets - The outsourcing of middle- and back-office services as well as increased demand for better technology in areas such as portfolio analytics, performance measurement and risk management are key trends that Concept Capital Markets is continuing to focus on.
As the firm’s senior managing director, Mike Rosen, explains: “These are the things we’ve been focusing on as a company in an effort to help our clientele meet the needs of the investing community, in particular institutional allocators.”
Post-trade analytics is one area the firm has been enhancing throughout 2011. The technology it uses can take Fix drop copies from any execution management system in the marketplace and aggregate all that data onto one screen on a real-time basis, explains Rosen. This enables a firm to take files from any custodian and upload onto the system, making for a highly efficient tool because as Rosen says, “you have the ability to more effectively run assets across multiple custodians and use multiple trading tools to do business.”
Concept Capital does not itself custody assets, but is instead an introducing broker, working with a number of leading global custodians. “However, our technology is set up so that we can deal with assets that are held in custody anywhere,” explains Rosen, adding that the firm’s prime brokerage business works with around five custodians. ConceptONE, the firm’s technology affiliate, deals with 20 to 25 different custodians, aggregating data for each of them.
Prime brokers with the strongest balance sheets are likely to dominate the space going forward but that’s not to discount smaller brokerages with a technology edge. “Increasingly you’ll have companies like ours that have the technology and trading capabilities to deal with assets regardless of where they’re held in custody,” suggests Rosen.
“Our vision is to be able to deal with any type of asset class within any type of trading strategy on one side, and on the flip side be able to deal with anywhere those assets need to be cleared and put into custody. Ultimately our goal is to fulfil managers’ needs and help them perform better.”
Another key trend this year has been the increasing number of managed accounts.
“A lot of the work we’re doing on a portfolio management and risk basis is to service those managed account entities. It’s an area in which we’ve seen specific growth. Ultimately, we end up being the intermediary - we have to deal with each separate manager, provide them with the information necessary to do their job, but we also have to provide all the information to the allocator so they can effectively monitor what’s going on in each sub account.”
Rosen thinks the growth of managed accounts and multi-custody solutions will continue for the foreseeable future, particularly in light of what’s happened with MF Global. The inability to move assets quickly to a custodian presents a huge business risk.
“If you’re not set up with multiple custodians and don’t have the ability to trade assets across those custodians, you could get stuck. It makes sense for certain investors to control their assets in managed accounts. Companies like ours can provide all of the tools necessary to do this in a cost-effective fashion.”
Please click here to download a copy of the Hedgeweek special report: The Evolution of the prime brokerage model - Challenges & opportunities 2011
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