Institutional FX: Uncensored Natallia Hunik

Episode description:
Natallia Hunik discusses challenges of fundraising for a hedge fund with Ronald Richter, co founder and managing partner of Bride Valley Partners, boutique advisory firm that provides best-in-class corporate finance, investment advisory and capital raising. Prior to Bride Valley Partners, Ronald held various roles in the alternative investments industry for the last twenty years.

Guest:
Ronald is the co-founder and managing partner of Bride Valley Partners and has held, for the last twenty years, various roles in the alternative investments industry. He worked at Union Bancaire Privée (UBP) in the bank’s Alternative Asset Management Group, which managed then portfolios worth $50 billion.


Highlights for discussion:
-Ronald shares his background and the behind-scene story on how he found Bridge Valley Partners; Ronald also shares his ample experience in capital raising.
-Fundraising is one of the biggest challenges to launch the fund. HF managers cited lack of personal network as the major worry when launching their own fund. How important is the personal network? Ronald shares his opinion on what are the most effective ways to raise capital, and how critical is it to have the personal network when launching a fund.
-Historically, marketing has been a challenge for the hedge funds as its only supposed to be catered for accredited, sophisticated investors. Most US hedge funds have their pages password protected. What does it look like in Europe under AIF directive? Ronald shares his opinion and observation on it.
-The capital introductions teams at prime brokers routinely highlight their industry connections and ability to facilitate meetings between capital-hungry hedge fund managers and yield-hungry investors. But the situation is less clear-cut for smaller to mid-sized hedge fund managers, many of whom will struggle to even get on-boarded by a prime broker in the first place. What relationships can startup managers leverage to get capital introductions?
-What are the top 3 mistakes hedge fund managers make when preparing their pitchbooks?
-Recent report from PWC on Crypto hedge funds indicates that the total assets under management (AuM) of crypto hedge funds globally increased to nearly US$3.8 billion in 2020 from US$2 billion the previous year. Is there a growing interest from the institutional investors for crypto investing? Ronald shares his thoughts on this and the potential crypto hedge funds’ future overall.

Natallia Hunik and Praveen Kumar dive into the hot topic of evolving crypto regulations and what the firms should be doing to stay within the lanes as global crypto regulations are evolving.
They discuss various jurisdictions for setting up crypto business and its pros and cons.

Guest:
Praveen is the founder and CEO of Belfrics Group. He has over 15 years of experience in financial markets with specific expertise in OTC and exchange-traded derivatives. He has served multiple financial institutions in India, the Middle East and Far east and has provided liquidity solutions to various exchanges.


Highlights for discussion:
-Praveen shares some details of the recent transaction in which his Crypto Exchange company Belfrics has been acquired by a US publicly listed company, and the multiples people could expect in the crypto business; (About the transaction: https://www.globenewswire.com/news-release/2021/08/26/2287147/0/en/Life-Clips-Closes-Belfrics-Group-Acquisition.html)
-Recent report from PWC on Crypto hedge funds indicates that the total assets under management (AuM) of crypto hedge funds globally increased to nearly US$3.8 billion in 2020 from US$2 billion the previous year. That constitutes 0.095% of the total AUM managed by the hedge funds. Around a fifth of hedge funds are investing in digital assets (21%); the average percentage of their total hedge fund AuM invested in digital assets is 3%. More than 85% of those hedge funds intend to deploy more capital into the asset class by the end of 2021.
Given this huge potential to grow, Praveen was asked about his thoughts on potential crypto hedge funds’ future and shared his opinions.
-As an industry pioneer starting in FX and ventured out to crypto early on, Praveen is followed by a lot of talent from the FX industry who comes after his footsteps and moved on to crypto projects. Many are setting up their own crypto funds. According to the same PWC report, Cayman Islands, US, Gibraltar, BV and Lux are the most popular jurisdictions for FX funds. Which jurisdictions give one the biggest bang for the buck? Praveen shares his insights on this important question
-What are the top 3 things for the new crypto fund managers to consider when starting their own crypto fund? Praveen shares his opinion.
-Banking is challenging for FX firms, how is it for crypto? How hard is it to acquire banking relationships for crypto firms and what do they need to keep in mind? Praveen talks about this in-depth.
-Is BTC still the major traded crypto currency for the hedge funds?

90% of hedge funds don’t raise more than $100m ever. So how to overcome and scale beyond that? What is the reason for this AUM plateau? Natallia Hunik discusses challenges of fundraising for a hedge fund with Laurence Yang, overachiever and successful hedge fund manager from Australia.

Guest:
Mr. Laurence Yang, an Australian resident, founded Laurence Holdings Group Limited in 2017 as a private investment holding company to manage investments for himself and Ultra-High-Net-Worth-Individual partners’ Single-Family Offices. Laurence has started his first fund in 2014, and in less than 2 years, by the end of 2015, Mr. Yang had generated over 50% return for his investors. Mr. Yang was able to start Laurence Holdings later with this successful track record.
In 2017, Mr. Yang formed Laurence Holdings Group Limited to serve as the corporate investment vehicle for its early investors. The company started the flagship Euro-Denominated Fund with a Net Asset Value (NAV) of €15.5 million in November 2017, by the end of May 2021, the fund has a total NAV of over €49 million.


Highlights for discussion:
1. As an incredibly young and accomplished fund manager as well as a “millennial”, Laurence shared his incredible story about how he started in the FX Hedge Fund space;
2. With interest rates fixed at record lows, investors are looking for higher returns more than ever. In fact recent report by Hedgeweek shows record AUM of 4 trillion dollars as investors fear inflation and flock into alternative spaces. Will hedge fund investors grow their risk appetites as a consequences of low rates and rising inflation? Laurence shared his opinion.
3. What type of FX strategy did Laurence deploy? With Carry Trade gone, many FX funds exited the space or shut their active currency strategies down. Laurence Holdings Group Limited however thrived in this environment. What type of currency investment strategies did the company apply and what made it a success?
4. 90% of hedge funds don’t raise more than $100m ever. So how to overcome and scale beyond that? What is the reason for this AUM plateau?
5. At FXHedgeFundExpo 2020, participants from the space noted lack of traders as a reason preventing them from implementing FX strategy into their fund. Laurence shared his opinion on this poll;
6. Investors’ biggest fear is preserving their investment during periods of extreme volatility. Currency markets are very prone to rapid market moves (whether its algo driven flash crashes, or central banks policy decisions). As noted by attendees during FXHedgeFundExpo 2020, risk management remains their most important criterion when selecting strategy. What time of risk management did Laurence employ to mitigate extreme vol risks?
7. Fundraising is one of the biggest challenges to launch the fund. HF managers cited lack of personal network as the major worry when launching their own fund. How important is the personal network? What are the most effective ways to raise capital?
8. What does Laurence plan to do in the next 5-10 years? What he might invest and what books he recommends for hedge fund managers? Also, what are the skills or qualities for a hedge fund manager?

How do European brokers market to regions given regulatory restrictions? How do they navigate the ever changing regulatory landscape and how are European clients differ from the rest of the world? In this episode, Natallia Hunik discusses running an FX brokerages in Europe with Ricardo Evangelista, CEO of ActivTrades Europe.

About the guest:
Ricardo Evangelista, CEO of Active Trades Europe, part of Active Trades Group, is one of the most reputable brokers in the industry. The group holds multiple financial licenses in Europe ( UK and Luxembourg) and abroad.

Highlights for discussion:
Ricardo shared his journey – how he spent a significant amount of time in the FX brokerage space to eventually become a CEO of ActivTrades Europe. His goal as a CEO and the motivation that kept him to stay in the space.
What does ActivTrades do to retain its top talent in the FX industry? And why there is such a high mobility in the FX sector?
Marketing for retail FX traders. What types of marketing work best for retail operations?
Competition among retail brokers – How often does ActivTrades conduct competitive analysis?
Does the recent Google restrictions on censoring FX advertisers (requiring validated financial license to target a region) help or hurt the end users?

This episode discusses reasons behind the FX industry struggles with getting banking and payment channels. Natallia Hunik discusses with James Cameron, Chief Risk Officer at iSignthis, independent card acquirer and e-money institution, publicly listed in the Australian and Frankfurt Stock Exchange (ASX: ISX | FRA: TA8) since 2015, why does the FX industry struggle with getting banking and payment channels. Why is the FX business considered ultra high risk by banking institutions? And what can FX businesses do about it?
Besides, James discusses the rationale behind considering the FX business as an ultra high risk by banking institutions, and what can FX businesses do about it.

Highlights for discussion:
James shares with the audience his background and success story. Reasons behind the launch of iSignthis and the businesses it serves;
The top three reasons making it so hard to find banking for FX brokerages;
As a result of high demand, the market forces play out with the fees that brokers need to pay to accept payments, what options that could happen for these fees to go down?
There are over 500 EMI licenses issued in the EU with more than half of these registered in the UK, what are the differences among these providers?
How people are able to get incorporated and licensed to increase chances of opening a bank account;
How the new fintech companies in the industry who do not possess any regulatory licenses operate their businesses and how do they add value to the industry
The type of due diligence brokers should perform on the payment solutions provider, and the precautions that brokers should take in order to safeguard their own and their clients’ funds;
The future of crypto payments which have been so ubiquitous in the West, but is taking a complete new spin in Asia and money is being moved cross-borders and settled using stable coins.

This episode covers all things FX and financial media! Natallia and Andrew Saks discussed media coverage of the FX industry, its shortfalls and whether and to what extent we can trust them. They shared their insights about journalistic standards in the industry, discussed the pros and cons of the current coverage and uncovered interesting opportunities.
Andrew Saks is the Head of Research and Analysis at ETX Capital & Founder of Finance Feeds. Before starting Finance Feeds, Andrew worked at other media outlets covering the margin FX industry. He shared the reasons behind his decision to start Finance Feeds and what made him sell it.

Highlights of this episode:
Major B2B media outlets for institutional FX – for example, there are more institutionally centered ones like FXWeek, eForex publication and also the ones covering the margin FX industry like Finance Magnates , Leaprate, FinanceFeeds, FNG that recently emerged.
Status quo of the current industry coverage. What are the existing news outlets covering the markets there and the reasons behind the shortage in the market.
The industry’s journalistic standards such as accurateness, fairness, and objectivity. Why there is a lot less investigative journalism and analysis but more of the republishing of company news in the FX industry? And, can you really trust, and to what extent that you can trust what u see in the FX news sites?
The concept of investigative journalism and if it exists in the B2B FX space. Who did a good job in this industry.
Journalists today seem to be pressured to take a perspective in stories, express their own viewpoints, and take a more partisan approach in writing stories than in the past. Why this happens and if this applies to FX journalism?
On the retail side of things, there are in fact many alternative outlets like directories, forums (like forex factory) where traders find opinions, commentary and discussion. If we can trust them and what are the alternatives?