Noviscient is creating an open
investment management ecosystem
where hedge funds and trading groups can send their trading signals
via API to a platform that offers access to institutional investors. Through
Saxo, Noviscient can access tailored multi-asset liquidity and post-trade
services via a single API.
Promoting a new way of working within asset management
Noviscient is an open platform fund, based on machine learning, cloud computing and artificial intelligence, which partners with smaller hedge fund managers (as well as independent systematic traders) to help them grow. While smaller, agile hedge funds tend to outperform larger hedge funds with regards to capturing alpha, they cannot achieve the economies of scale necessary to ensure their funds remain profitable. As a result, often investors, particularly institutional ones, are unable to, or choose not to invest in these types of small funds.
To address this issue, Noviscient has devised an open investment management ecosystem whereby it receives trading signals from its alpha partners, dynamically allocates capital and thereafter trades the strategies, after which it provides partners with a share of the profits, enabling them to grow their capital through performance.
Challenge: find a technology-driven prime broker
Noviscient has ambitious growth plans, aiming to have $100m AUM by the end of 2019 and $5bn AUM in the longer term. The firm's target investor base is institutional investors and large family offices that are unable to invest in small hedge funds due to strict investment criteria, the inefficiencies associated with multiple due diligence processes and the level of investment which can be accepted by smaller funds.
In order to attract investment into these types of funds from institutional investors, amongst other things, Noviscient needs to be able to demonstrate that it is partnering with best of breed providers in all areas, including prime brokerage.
“We partner with Saxo to execute trading signals from our hedge funds partners in order to offer customised alpha products for institutional investors that gives them exposure to smaller and more innovative managers that they otherwise are not able to access.”
Chairman and CIO, Noviscient
Solution: access multi-asset execution and post-trade services with full transparency of portfolio holdings and performance
With the requirement to demonstrate best practice, Noviscient selected Saxo as a partner as unlike many prime brokers which operate on legacy technology, Saxo's prime brokerage services are truly based on innovative technology.
In particular, via Saxo, Noviscient can access tailored multi-asset liquidity and post-trade services via a single API (OpenAPI and FIX API). As a result, Noviscient benefits from real-time reporting and a flexible account management structure - with master accounts and sub accounts - all from a single margin account.
Further, Noviscient can access more than 35,000 instruments across multiple asset classes with execution, financing and real-time risk management from a single clearing and custody account.
Current and future success
More widely, Noviscient is exploring ways in which it can collaborate with Saxo to leverage certain aspects of SaxoSelect, Saxo’s fully integrated automated portfolio management solutions to both firms' advantage. Further, Noviscient believes that it has benefited from being part of Saxo's trading community through networking opportunities and brand recognition, particularly in the Danish market.
Noviscient is a multi-strategy, quantitative, investment management platform with a business model based on alignment, performance and transparency. Noviscient is a registered fund management company (RFMC) under the Monetary Authority of Singapore
See how we built Noviscient’s solution
01 Client experience facilitation
- Noviscient built its own bespoke use interface via OpenAPI
02 Execution and trading services
- Asset classes include FX, CFDs, stocks, ETFs, options and futures
- Single cross-margin trading environment to execute orders and manage risk
- Liquidity sourced from 85 venues, multiple Tier 1 banks and ECNs
- Integration of own-flow execution through local memberships
- Market data service
- Real-time position keeping and account management
- Real-time risk and margin monitoring
- Activity log of all trading-related activity
03 Post-trade services
- Reconciliation, settlement and custody
- Automatic overnight financing
- Corporate actions processing and stock transfers
- End-of-day and real-time reporting across front-, middle- and back-office
- Collateral management and reporting
- Consolidated reports and end-customer statements
- MIFID II transactional reporting
- EMIR reporting
- Compliance reporting across 170 jurisdictions
- Integration of own settlement services and custodian
04 Tech foundation
- End-of-day file transfers for reporting and business intelligence
- OpenAPI services to build bespoke user experiences
- Real-time trade notifications for trade, order notifications and margin call data
- Real-time back-office platform via WebConnect/client monitor
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