Olivetree Financial Group
Charlotte Wall
05 March 2013
SLT talks to Charlotte Wall of Olivetree Financial Group about her move to the firm, its primary product and regulatory initiatives affecting securities lending
Image: Shutterstock
What is your role at Olivetree Financial Group?
My new role is global head of sales and marketing. My main focus is on marketing and selling our flagship technology product OTAS (Olivetree Trading Analytics System) to the buy side.
This is an equity platform that has been developed over the past three years and is transforming execution and portfolio management. It provides analytics across 10 market observables to help you make better investment decisions.
My new role is an exciting and challenging position that gives me the ability to draw on the equity knowledge that I gained at Morgan Stanley and use my four years of selling technology at Data Explorers and Markit. I really enjoy the marketing part too and have had great personal satisfaction in building out a new website www.olivetreefg.com and creating new marketing materials for the sales team.
Olivetree has seen an influx of former Morgan Stanley employees—many of whom you know—how has this helped you to settle in?
We are not all ex-Morgan Stanley! But yes, there are a few of us and this has definitely has helped me to settle into the organisation.
Daryn Kutner, who was previously global head of cash trading at Morgan Stanley, is the founder, and Mark Kelly—also ex-Morgan Stanley—is CEO of the securities division, specialising in event-driven advisory services and execution consultancy. After spending 16 years at Morgan Stanley, to be back working with these talented people was an obvious attraction, but the whole of the team is superb. I am learning something new every day and my skill set is also helping to build an even stronger franchise.
The company’s flagship product OTAS provides equity analytics. In what ways is this different to the products already in the market?
OTAS provides equity analytics to traders and portfolio managers to make better investment decisions. What makes it unique is the way it brings together 10 market observables into one platform. The data quality is excellent as we perform 160,000 data checks daily and the platform pushes information to the user by highlighting only statistically significant flags daily in areas such as implied volatility, short interest, director dealings and valuation.
When you combine sentiment across all of these observables, it gives funds the ability to improve performance as OTAS can influence timing of entry and exit points. It also acts as a risk warning system highlighting stresses and inflection points within your portfolio.
What about your organisation’s coverage of short interest?
We take data from Markit, SunGard and the exchange and back test these numbers to provide information on shares shorted as a percentage of free float, and also days to cover. We are working on expanding the coverage to percentage of shares available and also to provide some cost of carry indications.
The data is very accurate for days to cover as we are able to leverage all primary and secondary exchange volume data, so you get a true picture of liquidity.
Complementing OTAS, Olivetree provides institutional clients with event-driven advisory services and execution consultancy. What does this involve and how will you help on these fronts?
Olivetree Securities is an agency broker focused on the analysis and trading of event-driven situations. Our team uses a unique blend of sectorial expertise, event knowledge and the proprietary tools supplied by Olivetree Solutions to generate a superior understanding of these topics. Our expertise ranges from situations with very well-defined catalysts to those with a much less hardened juncture. Our clients are a varied mix of the world’s largest institutional and hedge fund accounts. Although our execution services are concentrated on equity products, we study all situations from a cross-asset perspective, with particular focus on corporate balance sheets.
We provide an independent agency execution offering that includes a full suite of low-touch execution products combined with a top quality high-touch service. Our neutrality provides full anonymity and allows us to maximise our liquidity reach, and our execution desk benefits from the proprietary tools that are developed by Olivetree Solutions. These tools are designed to enhance the decision making skills of our traders and that of our clients to ensure that they achieve the optimal execution. We use a combination of back-tested signals from other market observables, real-time liquidity analysis and a wide range of intraday signals to capture as much performance as possible for our customer.
Trade Shaper provides single stock strategies by incorporating projected alpha, impact, risk, volatility, spread and expected trade cost.
How close is the market to becoming acceptably transparent for regulators and participants?
The US Federal Reserve’s Daniel Tarullo recently presented to the Senate Banking Committee on various subjects. He said: “The regulatory and public transparency of shadow banking markets, especially securities financing transactions, should be increased”. I think huge moves have been made in last two years to provide more transparency. SunGard’s recent announcement on its global intraday data from its Astec Analytics system is a major step forward in satisfying and assisting trading and reporting requirements. The new disclosure rules under the European Securities and Markets Authority (ESMA) Short Selling Regulations (SSR), which says that any net positions over 0.2 percent of issued share capital have to be disclosed to the regulator and any net short position over 0.5 percent has to be made public, has also enabled the regulators to monitor short selling activity for any trace of market abuse.
The European Commission has now published its detailed proposals for an EU Financial Transaction Tax to be implemented under the enhanced cooperation procedure across France, Germany, and nine other EU member states. The scope of the tax is very wide and it is proposed that securities lending and repo transactions will be subject to the tax on one leg of the transaction at 0.1 percent. This would not be a good outcome for the securities lending market and would have a huge impact on liquidity and volume transacted.
The UK FSA has clamped down not only on the payment out of client funds for corporate access but also for data services. How will this affect your solutions business?
We are fortunate that OTAS can be classified as independent research. By being seen as research, it is an allowable service that can be purchased by a fund manager using clients’ commissions, ie, via flow commission. Our services are capable of adding value to the investment or trading decisions of portfolio managers by providing new insights and assessment of new and existing facts. We are not merely a data provider and are also helped by the fact we have an agency broker arm under the Olivetree Financial Group umbrella.
European hedge fund launches are still at record lows. Only 86 European offshore hedge funds launched in 2012 raising just under $9 billion in assets. Will this have any impact on growing your business?
This is a challenge especially when approximately 90 funds were also liquidated in 2012. The start up climate has been challenged by the eurozone political and financial crisis and of course by the regulatory uncertainty. Olivetree has a blend of long-only institutional clients and hedge funds. Currently, more than $3 trillion of AUM is managed with the assistance of OTAS. We are continuing to see this grow as portfolio managers, traders and risk managers are finding value in the product, so a lot of the growth is organic.
We have been working with a number of new fund launches and they have found the platform very valuable, especially when they haven’t yet established their internal models and infrastructure.
We also have tremendous growth potential in the US, hiring four new sales people and we look forward to seeing continued growth in this region.
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