Hong Kong Hedge Fund Sets Up Shop with TradingScreen and Imagine

DragonBack Capital, a Hong Kong-based multi-strategy hedge fund, officially launched in March and is busy building up its assets and portfolio. Three partners are heading up the fund with combined experience in the Asia Pacific markets of more than 50 years, which CEO Robert Lance says gives his fund a distinct local advantage."We're an Asia Pacific equity multi-strategy fund focusing on three core strategies-equity long/short, relative value and volatility trading," says Lance, who is a former co-head of Lehman Brothers' Hong Kong equities division. The fund launched with about $7 million in capital and Lance says he's looking at a soft close of $250 million in the first year and a total fund strategy of about $500 million.

On the front end DragonBack has implemented TradingScreen for EMS/OMS functionality, including compliance. Lance says that the TradingScreen solution enables the fund to route directly to sales trading desks or direct to models, although they don't use algorithms and view strategy as their edge in investment decisions.

DragonBack also signed on for Imagine Software's Imagine Trading System as its portfolio and risk management platform, specifically the ASP-service version Derivatives.com. "In the first iteration of the fund, the ASP version gives us a lot of flexibility and the cost of entry is lower," says Lance. "It also gives us the option to transition to bringing the system in house as we grow or bring in more users, depending on the situation."

With the TradingScreen and Imagine solutions in place, Lance and his team can also pre-allocate trades down to the sub-strategy level and maintain the portfolio on a real-time basis. "Anything that's listed that we're trading is straight-through processed into Imagine down to the sub-strategy level," he says, adding that any over-the-counter trades are booked directly into Imagine. "It's a very straight-forward process."

Lance says it was also important that the portfolio management and risk management be all encompassing with capabilities as a booking engine, as well as a cash management engine for use across the functional areas of the fund. "As portfolio management and risk control are segregated functions, we looked for a solution that if possible would suit all of our needs," says Lance. "Imagine is all encompassing and suitable for the investment team, operations and overall risk management of the fund."