Newedge’s business is based on an agency model benefiting from joint ownership of two French banks, Société Générale and Crédit Agricole CIB. Newedge maintains membership to 60+ derivative and 23 commodity exchanges.
Newedge Alternative Investment Solutions (“AIS”) sits within the Prime Clearing Services business line and is a 100-person global prime brokerage team of dedicated experts in liquid alternative strategies and is the recognised leader in CTA, liquid global macro, currency and volatility.
Newedge offers a full suite of prime brokerage services in liquid instruments including listed derivatives, OTC centrally cleared derivatives, OTC FX and cash instruments. The Capital Introductions team sits at the intersection of managers and investors. Additionally, Newedge AIS has a 12-person Advisory team based in London and Chicago whose deep dive analysis of manager strategies enables the Capital Introductions team to have a more meaningful dialogue with the investor community. Approximately 50 per cent of AIS business is derived from facing investors directly via managed accounts.
“We have been servicing futures managers for over 20 years now, where managed accounts are the de facto way managers can build their business. In 2000, we started developing our multi-asset prime brokerage platform. Over this time, we have always maintained an open dialogue with both managers and investors, which has helped us in building stronger relationships,” comments Duncan Crawford (pictured), co-global head, Newedge Alternative Investment Solutions.
Taking a more consultative approach is helping Newedge stay one step ahead of the competition. Whereas other prime brokerages may offer more of a “one size fits all” solution by focusing just on managers’ funds, AIS understands the various conduits an allocator can use to gain exposure to a strategy.
“We built our systems from scratch in the early part of 2000. This has meant we are able to offer far more tailored solutions,” says Crawford, who adds that the support of commodity UCITS and 40 Act alternative mutual funds were two main developments last year.
“We are working on developing alternative solutions that will allow UCITS to construct a CTA portfolio without using certificates.”
Another key development last year was the enhancement of its FX prime brokerage platform. Pivotal to this was the provision of a “reverse give-up” function to enhance managers’ workflow.
“A manager executes block trades with their preferred FX liquidity providers (LPs) throughout the day. The LPs notify us of the trade details as they are executed and are affirmed by the managers through an automated recap process. We net the trades into intraday positions and perform post-matching services for the managers. This operational efficiency makes the managers’ lives much easier.”
In terms of trading activity for 2013, Crawford says that they are already seeing big inflows into equities. Provided there is no further government intervention, the equity markets should continue to recover says Crawford. “Without that intervention we should see trends coming through. The markets are like a coiled-up spring; they are ready to trend, they need trend, and I think they will trend.
“We saw some phenomenal returns in January and February has also been a good month. Hopefully that can continue and we’ll see allocations coming back in to CTAs.”
On winning the hedgeweek award, Crawford says: “We’ve been working hard trying to provide the best service we can to our clients so it’s very encouraging to have received this award. The whole team are pleased that our efforts have been rewarded.”