Case studies
ChinaRock
Background
Interest in Chinese equities is at an all-time high as the international investment community eyes returns from the emerging financial superpower. Chinese equities specialist, ChinaRock Capital Management (ChinaRock) is a Hong-Kong based investment manager with more than US$500 million AUM. With 15 years’ experience of the region, it employs multiple investment strategies to ensure the best possible returns for its clients.
Challenge
Following the success of providing exclusive investment advisory services on a managed account for a large US investment manager, ChinaRock launched a new fund in September 2009. The firm’s managers were aware that getting the right technology in place from the fund’s inception would enhance its trading capability, and would send a positive message to potential investors that the fund – and ChinaRock itself – was in business for the long term. The firm was therefore looking for a portfolio management system that would handle daily operations as well as creating internal books. ChinaRock was also looking for pre- and post-trade compliance, full trade auditing and flexible reporting.
Kelvin Koo, head of operations at ChinaRock, explains the company’s thinking. “It’s a competitive marketplace for us. China is opening up and new regulations are allowing foreign investment in an economy that offers plenty of opportunities. Investors will obviously look at past performance, and ours is certainly strong in that area. But they are also more aware of the risks than before, and are looking for investment managers that run a watertight ship. We felt very much that the right technology would demonstrate that we take our responsibilities very seriously indeed and that we are looking at long term growth for the fund. As a result it would widen the gap between us and our competitors.”
However, ChinaRock was not a ‘greenfield’ site. With a managed account in existence it had already made investments in IT and technology, which it wished to optimise. “Any new system would need to integrate with our existing OMS and manage our existing portfolio, as well as connect to our prime brokers,” says Koo. “We also needed a relatively quick implementation. We didn’t want to spend the following twelve months tying our resources up in a major technology project. We wanted to be up and operational as quickly as possible.”
Solution
With a team that had extensive previous experience at financial institutions of all sizes, ChinaRock was aware of the systems available on the market, and looked closely at a number of solutions. In the end the company chose to work with Tradar and implement Insight, its portfolio management system.
Koo explains the decision: “The Insight system from Tradar is not heavily resource intensive: it has a fairly light footprint in terms of both hardware and the people required to manage and maintain it. That’s partly because of the underlying design of the technology, and partly because of the excellent levels of support that Tradar offers. We were convinced that the implementation would go quickly and smoothly, and we would have access to its functionality in a very short space of time.”
Insight also matched ChinaRock’s trading strategies, workflow and work load. “Our investment philosophy is based on multi-asset strategies. We’re not just a long/short equity house,” says Koo. “So we need to swap between multiple strategies according to the prevailing macro-trends. Our focus was on enabling that flexibility from a system that would allow us to set up new strategies as we wish, while maintaining the same quality of data outputs and reporting – rather than getting a cumbersome platform that could handle hundreds and even thousands of trades per day. That was a key factor in our decision to go with Insight.”
ChinaRock set aggressive timelines for the implementation, which took a total of two months from start to finish. This gave the firm plenty of time to familiarise itself with the new system, and to tailor and fine tune bespoke reports before the fund itself was launched. Support staff from Tradar worked on site for a few days to make sure ChinaRock’s portfolio managers were confident in using the system.
Koo reports: “Tradar absolutely delivered on their promises to implement on time. In the run-up to launching a new fund, there are plenty of things to worry about. Thanks to Tradar, our IT wasn’t one of them.”
Results
ChinaRock now has trading staff at its San Francisco and Hong Kong offices using Insight. They have found it straightforward to use and easy to navigate. “Feedback has been overwhelmingly positive,” says Koo. “It takes almost no time to get up to speed on it, so we didn’t waste a lot of time in learning how to use it and training new users.”
ChinaRock uses Insight on its trading and operational sides. The firm is able to check out what a trader has entered, get the relevant position file out and export a trade from its OMS. It produces internal reports including P&L, variations and exposures, and all the numbers that ChinaRock needs. With Insight in place, ChinaRock has consistency of data across multiple reporting types, and its trade history is readily accessible for analysis.
Koo concludes: “This is a new fund, and it was important to us that it could start delivering immediately. By having Insight in place we have been able to direct our attention and the expertise of our traders and portfolio managers into creating returns for our investors. They’re not wasting their time trying to find their way round a vulnerable spreadsheet. Instead they are completely focused on the daily operations of the firm. That makes the investment worthwhile.”