I started my career in financial markets with Daiwa Europe, quickly moving to Salomon Brothers as a trader on the Japanese Warrant desk. Salomon’s was a great house who were not technology shy. Most systems were just information terminals for the likes of Reuters, Bloomberg and an obligatory Quick machine for Japanese stocks, but as we advanced through the ’90s and started issuing Warrants as a house, we needed to have desktops in order to model these positions.
In 2002 I set up my own shop and launched a convertible arbitrage fund. By 2007 the assets under management had reached USD 500 million and with 5x leverage, exposure was north of USD 2.5b. There was a lot of individual lines and exposures that needed to be managed. Convertible bonds have exposure to pretty much every main segment of financial markets; Equity, Bond, interest rate, FX, volatility, and credit, to name the primary ones. Building the models that accurately valued and calculated the risks whilst considering the cross-correlation risk was a mean task. Not only did we manage to build this architecture, but we also integrated trading algorithms that would re-hedge our exposure in liquid markets on the fly and turned Hedgeable risk centres into hedged tradable profit centres.
We also developed a sophisticated platform to generate our global opportunity list. Sucking in pricing information on multiple assets from multiple sources, we cleaned and verified these prices, built models to extrapolate pricing where actual prices were not available, and then displayed the results according to search filters. The search filters allowed us to view the market of converts by geo, sector, overall cheapness to fair value and on and on. This gave us a massive advantage as no name would slip through our net, being able to scenario test potential candidates within the current portfolio allowed us to enter into positions that could also hedge other risks, add necessary diversity and enhance returns.
The culmination of my career in finance and my passion to utilize the best technology have at last collided. Technology has exploded over the last decade. Although this is not really fully appreciated at the frontend experience level, it’s the backend that has really seen the major changes that allow us, to only now, embark on the building of N2, our private markets platform. For the first time, it is now possible to build a truly intelligent platform that digitalizes mundane human processes, literally in real-time and all factual. I am so excited and truly passionate about this new project, using the amazing tools we have to make the processes that make our lives slow and laborious a thing of the past. I see N2 as a pure enhancement to our work lives, not a replacement, human capital will always, and should always, remain central to important decision making.