Maple Leaf Capital, a London-based hedge fund, recently came one step closer to straight-through processing when two of its vendors linked their systems. The new integration between Sophis, provider of Maple Leaf's portfolio and risk-management applications, and TradingScreen, provider of the fund's connectivity and trading platform, will alleviate the need for some inefficient re-keying.
"I think we were partially responsible for this link coming about," says Portfolio Manager and CEO of Maple Leaf Capital Michael Wexler.
Wexler says that when the fund, called the Maple Leaf Opportunity Fund, was launched in October, management looked at eight or nine different technology providers, "demoed a couple" and finally selected Sophis and TradingScreen.
Sophis was chosen because it allowed portfolio managers at Maple Leaf to see their risk in real time, a critical requirement when managing a "volatility-arbitrage" strategy. That strategy is used when one "extracts volatility from any equity instrument that has it embedded - listed options, OTC - We extract the volatility component of the asset," says Wexler.
Real-time-risk calculations are important for such a fund because of its complex strategy. "Our risk is much higher than someone who trades infrequently. As our exposure changes, so does our risk, and we need to see that in real time, not 10 or 15 seconds later," he says.
The connection will now allow for information from the TradingScreen platform, used by Maple Leaf to connect with its counter parties, execute orders, etc, to flow into the Sophis portfolio and risk-management applications.
Before the link was established, says Wexler, that information had to be transferred manually or re-keyed.