Hedge fund managers and their investors need to adapt to volatility while achieving capital and liquidity efficiency across all asset classes. Jurrie Reinders (pictured), Head of Prime Services, Clearing and Cross Asset Secured Financing, Europe at Societe Generale, talks about how the firm is supporting clients through a number of different solutions.
Hedge fund managers and their investors need to adapt to volatility while achieving capital and liquidity efficiency across all asset classes. Jurrie Reinders, Head of Prime Services, Clearing and Cross Asset Secured Financing, Europe at Societe Generale, talks about how the firm is supporting clients through a number of different solutions.
Can you outline the industry trends which have been driving growth and development within your firm over the past year?
In a post covid world, clients are diversifying their strategies and are looking for yield where they can find it. Market events such as the mini budget, USD rally, Energy price volatility, regional banking collapse continue to remind us that financial markets are as vulnerable as they can be profitable.
The biggest winners are the ones that are less reliant on single approaches to investment strategy but rather maintaining a mix across asset classes.
Therefore, more than ever, there is an opportunity to help clients achieve capital and liquidity efficiency across all asset classes through true cross asset margining and finance solutions.
Another emerging trend is the ongoing quest for easy access to liquidity in volatile markets and times of stress. Clients need to adapt to volatility, the squeeze on liquidity and increased focus on balance sheet by their traditional providers while maintaining profitability and margin efficiency. We see potential expansion in the role that cleared repo can play in providing access to a broad pool of repo trading counterparties.
At Societe Generale, we are currently a market leader within this space being the only bank with clients on all CCP platforms (EUREX, LCH Ltd, LCH SA and DTCC).
What are your business objectives for the year ahead and how do they align with the needs of your clients?
We will continue to strive to offer our clients efficient solutions, focusing on three main areas:
• Best in class cleared derivatives provision with the widest number of listed exchanges and OTC clearing houses.
• Cross asset margining, encompassing fixed income, equity, FX and commodities underliers for cleared and bilateral products.
• Traditional PB financing solutions for hedge funds and corporate clients extended to cleared repo for real money managers, pension funds and insurance companies.
Are there upcoming regulatory updates which could affect your business and that of your clients?
Although European and UK pension funds are currently exempt from mandatory clearing under EMIR until 18 June 2023 (with this now being extended until 2025 in the UK), the clearing obligation remains an important driver of pension scheme arrangements into IRS clearing.
Pension funds need to set up with a counterpart which provides clearing. This in itself can include several hurdles, such as legal documentation, as well as ensuring access to liquidity to pay VM in cash. However, once these hurdles have been passed and they are operationally ready, our clients will be looking to make this new set up as efficient as possible.
As a prime broker, Societe Generale offers solutions to help clients overcome the challenges posed by OTC clearing. Our intent is to help clients transition from a bilateral to a cleared solution, assisting them to meet their clearing obligations, gain capital efficiencies and minimise cost & business disruptions.
How can you best ensure you deliver value-add to your client base?
Societe Generale assists clients in finding the most suitable margining solutions including CCP calculated margin, VaR house margin, OTC haircuts or a combination of all. We are best placed to support clients navigate the current environment by using strategies which create IM efficiencies.
For example, for a Fixed Income RV Hedge Fund looking to maximise returns on a strategy incorporating bonds, futures, IRS and Repo, their portfolio could realise margin benefits through taking advantage of SG’s leading position in offering clearing house cross margin access for futures vs IRS on CME or Eurex, which could realise IM efficiency of 40%.
Jurrie Reinders, head of prime services, clearing and cross asset secured financing, Europe, Societe Generale – Jurrie has been the Head of Prime Services, Clearing and Cross Asset Secured Financing, Europe at Societe Generale since October 2022. He joined Societe Generale in 2013 as a Cross Asset Secured financing trader and he was appointed Global Head of Cross Asset Secured financing in November 2021. Jurrie started his career at Fortis Bank in New York, structuring credit derivatives. He then moved to ABN AMRO as an index and financing trader before joining Societe Generale. He holds a master’s degree in Financial Econometrics and Operational Research from Erasmus University, Rotterdam