Recent economic metrics show some concern we could be nearing a period similar to that of the 1970s. Both the CPI and PPI, Finished Goods less Food & Energy, ran up into 1974. The Unemployment rate, and EHUPUS Index followed and the QoQ GDP went negative for 3 quarters in a row, meeting the above definition.
There was a period of recovery, when CPI and PPI were both reduced by at least 50%, while unemployment pulled back from a rate of 8.87% to 5.7%, and there were 20 straight quarters of positive QoQ GDP.
Then Inflation reared its ugly head again and both CPI and PPI doubled, Unemployment almost doubled rising from 5.75 to 10.67%, and there were 2 instances of QoQ GDP being negative for 2 consecutive quarters.
Now, the unanswerable question is this: was the pandemic a one-off event or are we setting up for a similar pattern to be repeated?
When looking at the more recent CPI and PPI readings, its evident that there is subtle, but undeniable, upward trend.
CPI
PPI
Unemployment
Is there any evidence that unemployment is on the verge of turning higher, other than the thesis we are headed into a period of stagflation?
According to the St. Louis Fed, FRED, Temporary Help Services has peaked and begun to head lower.
Other employment metrics:
ISM Manufacturing Report on Business Employment
Job Openings
This last employment chart is exceptionally relevant considering the recent intentions of Elon and Vivek under the new administration.
As for “stagnant economic growth”, the Atlanta Fed has a different view: 2.5% is healthy and a long way from negative.
So, what should we be monitoring to help anticipate the possibility of Stagflation?
We thought taking a deeper look at those Inflation metrics, and what is really driving them. Is it different than the 1970s episode?
Of the 2.6% present CPI #, 2.86 of that Is Core Services, and of that #, Shelter is 1.74 and Transportation Services is .51.
As seen above, both have been moving steadily lower, but just recently had small upticks.
In the case of PPI, Services represent .179 of the .197 total number, or 91% . Finished Services less Trade Transportation and Warehousing represent more than 50% of the Gross number at .122.
Why get into the weeds here? Both inflation metrics have been on the glide path the Fed has been attempting to navigate since they began raising rates. Why can’t the market just shake the recent small upticks off as “noisy” numbers?
This is why:
Since the Fed began reducing rates in September, by 75bps, the yield on the 10yr TSY has increased 85bps. This is not exactly what the intended outcome was. So, Investors are asking questions, which brings us back to the weeds of what exactly is driving the very subtle uptick in the 2-inflation metrics.
With respect to the PPI for services less trade, transportation, and warehousing, the following are included: telecommunication services, medical care, insurance, and lodging.
When we see charts like the one below, its not hard to understand why the PPI is doing what it’s doing. The medical care inflation chart was simply too depressing to include as most of know all-too-well, already.
So, we narrowly focus on Shelter and Services contributions to the CPI and PPI to see if the subtle uptick turns into something more. But let’s not forget about the other side of the equation, unemployment. The November jobs number will be even more highly anticipated than usual. October was the weakest number since December of 2020.
December 6th the NFP will be released and should provide clarity on whether the recent 12k number was a fluke or the beginning of something few market participants would like to see: potential stagflation.
Have a great weekend!
Best
Meraki Trading Team
About Meraki Global Advisors
Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development
We are excited to announce that Meraki Global Advisors has once again made a remarkable impression in The Outsourced Trading Handbook 2024, published by The TRADE and Global Custodian. As the industry continues to evolve, Meraki has demonstrated resilience, adaptability, and excellence in serving its global clientele. The latest results from the Outsourced Trading Survey reveal not only strong performance across various categories but also affirm the firm’s commitment to delivering superiortrade management solutions.
Firmly Above Overall Global Average
Meraki’s overall average score of 6.42 (out of 7) places it comfortably above the global average of 6.04, solidifying its position in the “Very Good” camp. In fact, Meraki’s standout performances were in several crucial categories, including Execution and Service Level Factors, both scoring an impressive 6.67 vs 6.22 and 6.16 global averages respectively. This places them firmly ahead of their global peers, especially notable in a year when many other providers saw slight downturns in the survey.
The firm’s Trade Decision Support category also saw significant growth, improving by 0.29 basis points over the previous year and outperforming the global average by a striking 0.72 points. This underscores Meraki’s ability to offer expert insights and recommendations, making a measurable impact on its clients’ investment decisions.
IPO Process: A Clear Winner
One of the more interesting developments this year was the introduction of the IPO Process and Allocations category, where Meraki received a commendable score of 6.40, far exceeding the global average of 5.33. This is a testament to Meraki’s skill in navigating complex IPO environments, communicating client’s intentions appropriately, and ensuring clients receive the best possible outcomes in a competitive market.
Client-Centric and Customizable Solutions
At the heart of Meraki’s success is its client-first approach, which has resonated deeply with its global client base. Described by one client as “the Cadillac model,” Meraki’s customized, high-touch service is far from the “one-size-fits-all” traditional broker-dealer model. This sentiment was echoed in the survey, with an overwhelming 57% of clients rating Meraki’s overall service as “Excellent.”
Additionally, 100% of respondents stated that they would recommend Meraki Global Advisors to their industry peers. This speaks volumes about the trust and satisfaction clients have in the firm’s ability to deliver both operational efficiency and strategic growth support.
Standing Strong in a Competitive Market
As Meraki points out, there is a growing realization in the industry that “if something is free, then you are the product.” This shift has led to higher expectations from clients, who are increasingly valuing tailored and complex service offerings over low-cost alternatives. Meraki’s differentiation in the market is clear: their ability to “thrive on complexity” and “scale with clients’ strategies” sets them apart, as evidenced by their consistently high scores.
Looking Ahead
Meraki Global Advisors has shown that it is not only keeping pace with the evolving outsourced trading landscape but also setting new standards. Given their client-first approach, differentiated model, and commitment to excellence, it’s safe to say that Meraki will continue to excel in future surveys and maintain its position as a leader in the industry.
We are proud of what Meraki has accomplished and look forward to another year of success, innovation, and continued client satisfaction.
About Meraki Global Advisors
Meraki Global Advisors was founded with a rebellious determination to deliver truly conflict-free services to asset managers. Headquartered in Park City, Utah with offices in New York and Hong Kong, Meraki provides outsourced global multi-asset trading, leverage management, and capital introduction services to the asset management industry. Meraki Global Advisors LLC is a FINRA member and SEC Registered. Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development (646) 666-7041 mm@mga-us.com
Vietnam will remove a requirement for overseas investors to fully pre-fund equity transactions, adding to the country’s efforts to increase its chances of a FTSE and MSCI market classification upgrade to emerging market status. The regulatory change, effective Nov. 2, 2024, should resolve a long-standing barrier that has prevented the nation from being upgraded from its current frontier market status by both FTSE and MSCI. The current 100% prefunding requirement for overseas investors has hindered large funds from fully investing in the Vietnam market.
Under the announced change, local brokerage firms will assess the risk and determine any pre-funding ratio requirements for their foreign institutional investor clients when placing orders. Regardless, client accounts must be funded by 9:30am on T+2 to complete normal trade settlement. If an overseas investor fails to complete the payment, the liability will be assumed by the broker.
“We think the changes would enable FTSE to upgrade Vietnam to Emerging markets within the next 12 months, leading to more than $500mm of passive inflows into the market and potential positive revision from MSCI,” J.P. Morgan Market Research said in a note.
Even with the removal of the pre-funding hurdle, most publicly traded Vietnamese companies are still subject to foreign ownership limitations (FOL). For example, the combined stake of foreign investors in any listed bank is limited to 30% and 49% for securities listed in the real estate, oil & gas, and construction materials sectors. When a listed Vietnamese company has “reached its FOL limit” (i.e., the proportion of shares available to foreign investors have all been acquired by foreigners), and a foreigner wants to buy more shares in the company, the purchaser must buy shares from a foreigner that already holds them. The foreigner that holds these shares typically demands a premium above the prevailing market price when selling their shares, triggering a mark-to-market loss for the new investor.
Sourcing liquidity presents different challenges in Asia than in the US and Europe, with Vietnam currently trading around USD$800mm on average per day across the entire listed market. On-the-ground and live trading experience is essential when navigating difficult liquidity landscapes. Firms investing in Vietnam should ensure their trading desk is well-versed in the idiosyncrasies of the Vietnam market while maintaining relationships with local and foreign brokers to benefit from color on discreet blocks available, as well as impactful news and flows. These lines of communication carry significant value to market participants. Additionally, traders must pay special consideration to information sharing. Careful management of order flow is important in all markets, especially in Asian emerging markets where governance and event risk can be significantly more common and corrosive, driving intraday volatility.
About Meraki Global Advisors
Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development (646) 666-7041 mm@mga-us.com
At Meraki Global Advisors, we pride ourselves on being more than just an outsourced trading solution. We partner with our clients, offering tailored services that cater to their unique needs, whether they are emerging managers or large institutions. Our team of highly skilled traders and industry professionals works diligently to provide customized trading strategies, seamless integration, and real-time insights that empower our clients to achieve their investment goals.
Why This Award Matters
Winning the Best Outsourced Trading Solution award reflects our dedication to innovation, transparency, and client success. The With Intelligence HFM US Services Awards recognize providers that have demonstrated excellence in customer service, operational infrastructure, and a deep understanding of their clients’ needs. This accolade validates the hard work and commitment of our entire team at Meraki Global Advisors.
Our Unique Approach
Meraki Global Advisors has redefined the traditional outsourced trading model to preserve the investment manager’s integrated and collaborative internal trading desk experience, enhance their sub-optimal trading desk practices, and alleviate growing cost burdens. The firm’s unbundled offering embraces the ethos of what outsourced trading is: operating as an unconflicted extension of the investment manager capable of trading all asset classes and markets—a quality that represents the model’s core value proposition. Our traders capture alpha by focusing on less orders, monitoring portfolios with hypersensitivity, and understanding each client’s specific processes and goals.
Our expansion strategy, which includes adding traders as new mandates are secured while also maintaining a 3:1 client to trader ratio, allows us to remain agile and responsive to the evolving needs of our clients. This flexibility, combined with our deep industry expertise globally, positions us uniquely within the market.
Looking Ahead
As we celebrate this achievement, we remain focused on the future. Our goal is to continue providing innovative trading solutions and expanding our capabilities to meet the growing demands of the investment management industry. We are committed to setting new standards in outsourced trading and supporting our clients in navigating the complexities of the financial markets.
We extend our heartfelt gratitude to our clients for their trust and partnership and to the With Intelligence HFM US Services Awards for this recognition. This award is a testament to our team’s dedication, and we look forward to building on this success.
For more information about Meraki Global Advisors and our award-winning outsourced trading services, please contact us or visit our website.
About Meraki Global Advisors
Meraki Global Advisors was founded with a rebellious determination to deliver truly conflict-free services to asset managers. Headquartered in Park City, Utah with offices in New York and Hong Kong, Meraki provides outsourced global multi-asset trading, leverage management, and capital introduction services to the asset management industry. Meraki Global Advisors LLC is a FINRA member and SEC Registered. Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development (646) 666-7041 mm@mga-us.com
Welcome to this episode of “Meet the Meraki Team.”
Meraki Global Advisors is a leading outsourced trading firm that has redefined the traditional outsourced trading model to preserve the investment manager’s integrated and collaborative internal trading desk experience, enhance their sub-optimal trading desk practices, and alleviate growing cost burdens.
We have a special guest to share his wealth of experience and expertise. Joining us is EJ Stockley, Partner & Global Head of Trading of Meraki Global Advisors.
Prior to joining Meraki, EJ was a trader at First State Investments in the UK and Singapore. Gaining global multi-asset trading experience in Pan-Asian, EMEA, and Americas markets. In addition to trading responsibilities, EJ also was on the MiFIDII project team at First State UK. EJ began his career at Janus Capital on the operations team in Denver before relocating to Singapore to become a trader with an Asian market focus. He received his degree in Business Administration, with concentrations in Finance and Accounting, from Northeastern University.
In this episode, EJ will take us through his journey, sharing valuable lessons learned and how each experience shaped his approach to trading and risk management. This promises to be a captivating conversation with a true industry expert.
Let’s dive right in!
Q1: Can you start us off by telling us about your background and what brought you to Meraki?
I started my career in finance while in University in Boston, working for a fixed-income asset management company. After college, I moved to Colorado, where I started working for Janus Capital and after a few years working in the headquarters in Denver, I moved to their Singapore office where they’re building out an investment team. This was supposed to be a two-year stint, but I ended up staying in Singapore for about seven years. Halfway through my time in Singapore, I moved to First State Investments, which is the asset management arm for the Commonwealth Bank of Australia.
I moved to the First State to London where we created EMEA and the Americas, and helped get the desk become MiFID II compliant. I met Ben, I was a client of his during my time in Asia and we always stayed in touch after we went our separate ways. Ben told me about his thoughts for starting Meraki, and I thought it was a great opportunity and being able to live in Park City was pretty appealing as well.
Q2: With Meraki’s outsourced trading model being as close to an in-house trader as possible, what other responsibilities can your clients expect from their dedicated trader aside from execution?
Outside of execution, we monitor client’s portfolios for news, manage their commission wallets, help negotiate rates for high touch and electronic trading, manage their broker relationships, build custom reports around earnings, short interest, and position reporting, amongst various other things they might need. Whatever you need or expect from your trading desk is exactly what we think we should be able to deliver in a cost-effective manner.
Q3: Please explain how the experience level of your traders is of value to your clients.
Our traders have experience across regions, asset classes, and different types of asset managers and investment banks. Having experienced traders who’ve seen various market cycles and conditions, are familiar with trading various products, and having relationships with various business lines in the street are all crucial to providing the service our clients have become accustomed to. Our multi-asset experience allows us to connect to various parts of a firm perhaps a single product trading desk might not have access to.
Q4: How do you think your professional experience and that of Meraki could enable the firm to work with larger traditional institutions to incorporate an outsource trading desk?
Larger financial firms have historically had their own in-house traders, but it seems like they are starting to look at outsourcing more closely for various reasons. Whether it’s to cut costs, gain experience in markets or products that they aren’t as comfortable with, or to add supplemental support for their internal team. Given the range of experience of our employees with many of us working at large buy-side firms, we know how they work and know what they need to receive to gain the most from a trading desk. That coupled with our flexible, authorized trader model. I think we could offer the most seamless solution to their current business model while solving for their needs.
Q5: With most of your traders having broad international experience, how does this add value to your clients?
Every market or region has a unique market structure that can present difficulties on the trading side. Knowing where and how to access liquidity, having relationships with our clients counterparties, and knowing how to navigate each region or market is essential for us to adequately cover clients. In Europe, especially, there are multiple avenues for liquidity, and our experience allows us to know and create an environment that ignores what the street calls “toxic” liquidity, to ensure that information leakage on your order is minimized and best execution is achieved.
Q6: How does the work-life balance in Meraki impact the firm’s culture? Park City is not exactly a typical location for the headquarters of a global trading operation. With that in mind, how does the culture cultivated Meraki benefits its clients?
Post the pandemic, you’ve seen quite a few large financial institutions, opening offices in locations outside of the traditional financial centers. There are various reasons that this is happening, but I think people have realized you don’t need to be based in a financial center to successfully be in a financial business and offering employees an option to have a better work life balance is becoming more important.
Being headquartered in Park City gives us a unique offering for being able to attract and retain talent. Culture in our office is very important as we want our office to be a place people are looking forward to coming to, not dreading it. Most of our employees do things together outside of work, like skiing and interior, playing hockey after work for a team the company sponsors, or hiking and golfing in the summer.
Q7: When dealing with a spectrum of different portfolio management styles, how are you able to juggle the distinct needs of each, and what experiences in your career have contributed to your ability to do so?
Getting to know each portfolio manager or CIO needs from a trader is essential regardless of whether an internal or an outsourced trading desk. Working at large institutions and trading for various PMs, you realize that each individual you are covering expects and needs different things. At my previous roles, I was covering PMs across numerous different time zones and regions, so finding out what was important to them while they were asleep was essential. When we sign up a new client, this is a critical component of our onboarding, understanding exactly what these individuals want from their trading desk, we tailor a solution to fit those needs.
Q8: Meraki clients rave about the value add Meraki brings to how your outsourced trading model has made what were previously their pain points now triumph. What makes Meraki so unique and why hire your firm over other outsourced trading firms?
I think the two most important things that differentiate ourselves is keeping the lowest client to trader ratio in the industry and our unique authorized trader model. I don’t believe a trader can provide the service that we expect if they’re covering 10, 20, 30 clients, even three to five clients per trader allows us to really understand what our clients are looking for and really become ingrained in their portfolios. Our authorized trader model allows our clients to get recognition with all their counterparties so their commissions are easily attributable to the resources they use or acquire. We firmly believe this model removes all conflicts and keeps things as seamless as possible for our end clients.
About Meraki Global Advisors
Meraki Global Advisors was founded with a rebellious determination to deliver truly conflict-free services to asset managers. Headquartered in Park City, Utah with offices in New York and Hong Kong, Meraki provides outsourced global multi-asset trading, leverage management, and capital introduction services to the asset management industry. Meraki Global Advisors LLC is a FINRA member and SEC Registered. Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development (646) 666-7041 mm@mga-us.com
We are delighted to announce that Meraki Global Advisors has been shortlisted for the Best Outsourced Trading Solution category at the prestigious 2024 With Intelligence HFM US Services Awards. This recognition is a testament to our unwavering commitment to delivering innovative and efficient trading solutions to our clients.
The shortlist was highly competitive this year, reflecting the incredible calibre of entries across the industry. We are honored to be recognized alongside some of the top firms in the hedge fund sector, all of whom are driving forward the standards of service and innovation.
Our Founder and Managing Partner, Benjamin Arnold, expressed his excitement, stating, “At Meraki, we have always focused on creating solutions that empower our clients to achieve their goals more effectively. Being shortlisted for this award underscores the impact of our efforts and our dedication to excellence in outsourced trading services. We are proud to be recognized at such a high level and look forward to continuing to serve our clients with the best possible solutions.”
The winners will be revealed at a spectacular gala dinner and ceremony on September 12, 2024, at the architecturally stunning Guastavino’s in New York. We look forward to celebrating this achievement and the success of all the nominees on this special night.
Meraki Global Advisors was founded with a rebellious determination to deliver truly conflict-free services to asset managers. Headquartered in Park City, Utah with offices in New York and Hong Kong, Meraki provides outsourced global multi-asset trading, leverage management, and capital introduction services to the asset management industry. Meraki Global Advisors LLC is a FINRA member and SEC Registered. Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development (646) 666-7041 mm@mga-us.com
Welcome to this episode of “Meet the Meraki Team.”
Meraki Global Advisors, a leading global multi-asset outsourced trading firm, was founded with a rebellious determination to deliver truly conflict-free services to asset managers. At Meraki Global Advisors, our team is our greatest asset, and today, we have a special guest to share her wealth of experience and expertise. Joining us is Mary McAvey, Vice President of Business Development of Meraki Global Advisors.
Mary McAvey joined Meraki after spending three years at With Intelligence as a Commercial Sales Manager. At With Intelligence, Mary helped manage the flagship brand HFM and after the acquisition of Hedge Fund Alert was also responsible for heading up commercial sales for HFA. Mary began her career in the financial services industry at Enfusion, where she was a Pre-Sales and Marketing Analyst. She earned her BA in Political Science and Government from University at Albany, SUNY.
In this episode, Mary will take us through her journey and how each experience shaped her approach to helping her clients solve for paint points.
Let’s dive right in!
“I want to understand why we’re having this conversation around outsourced trading. What are your current pain points? What is a goal that you want to achieve? How can we help you?”
Q1: Share with us about your background and how you found yourself in the outsourced trading world?
I started my career as a pre-sales and marketing analyst at Enfusion, which is a well-known order and execution management firm within the industry. Within the first two months at Enfusion, I discovered that my skill set really transferred over to a sales and relationship management role. Enfusion was having me attend conferences and help with client roundtables, which is where I really thrived.
While at Enfusion, I was also attending With Intelligence conferences which is where I got connected with their sales leadership team and eventually was asked to join With Intelligence by helping expand the U.S. commercial sales team under their hedge fund brand HFM. At HFM I was really able to grow my industry knowledge and industry network on a global scale.
Working with funds and service providers all over the globe, it really helped me figure out what side of the industry I could really excel in. While at HFM, I was introduced to Benjamin Arnold, the Founder and Managing Partner of Meraki. We actually stayed in touch for a few years, and he eventually approached me to help start the Meraki sales team in New York City.
Ben is extremely smart and passionate about outsourced trading, and as I met the team while going through the interview process, I knew Meraki was the firm I wanted to back and help grow.
Q2: What excited you most about joining Meraki?
What excited me most about joining Meraki was not only the people at the firm but also the way that they value their clients. They view their clients as partners and as someone who has been in the financial services world and specifically on the sales side, relationships are a huge part of this industry, and why I have been successful.
When I was flown out to Park City during my interview process, I was able to meet the team and hear about the traders’ experiences, for example David coming from these larger managers to joining a smaller firm and it feeling more like a family. I also believe that the Meraki outsourced trading model is extremely unique and customizable, and that is something that the industry is looking for.
When outsourced trading started, it was a lot of equity trading for emerging managers and launches. But over my two years at Meraki, we’ve seen assets across the board, and large institutional asset managers to family offices, as well as those launches coming to us to discuss outsourced trading.
There are three different types of outsourced trading models. One being the traditional agency model, the other one being introducing the broker-dealer model, and the third being a pure buy-side outsourced trading model.
Meraki Global Advisors will fall under the pure buy-side outsourced trading model. We are a registered broker-dealer, but we also have a specific license from FINRA that allows us to piggyback off of our client’s capabilities, therefore allowing us to trade every single asset class in every region of the world.
Meraki is the only outsourced trading firm in the space that has a 3:1 client-to-trader ratio. A lot of our peers in the space, will have one trader covering anywhere from 20 to 30 clients. But when you sign on to be a client of Meraki, you truly do receive a global, seasoned, multi-asset trading desk for a lower cost.
Q4: Why outsourcing from an operational perspective?
There’s no training gap, there’s no downtime, there’s continuity. You never have to worry about a trader being on vacation, and there’s transparency within our outsourced trading firm.
Q5: Why do Meraki’s clients decide to pursue outsourced trading?
There’s a few different reasons why firms turn to outsourced trading. One of them being maybe they’re an emerging manager or a launch, and they’re looking to cut costs.
Another reason may be that they have traders based in the U.S., but they want to start trading in other regions and other markets. Meraki is a 24/6 coveraged outsourced trading firm. Not only do we have traders based in the U.S., but we also have traders based in Hong Kong, and they cover and split European hours.
When you join as a client for Meraki, you don’t only get access to one trader, you get access to a global trading desk. Instead of hiring a trader or opening up a desk in other regions, they’re able to outsource it and know that their dedicated traders have local expertise in the markets they are trading in.
Q6: What pain points are Meraki’s clients trying to address?
A pain point that comes to mind, especially if a firm is already using an outsourced trader, is scalability. I think a lot of our competitors are really good at executing on equities, and they may not be able to execute on other asset classes, whereas within the Meraki model, we have the capability of trading every asset class.
For example, fixed income is a hot topic, especially where the industry is at right now. We’re definitely seeing a lot of firms looking towards opening up a fixed-income fund or adding fixed income to their portfolio. At Meraki we have the capability to piggyback off of our clients. So we are able to scale with them and trade it.
Q7: How has the outsourced landscape changed?
I joined the firm in May of 2022, and my understanding of outsourced trading was that a lot of emerging managers and hedge fund launches were looking to OT to save money. But what has proven to me over the past two years that I’ve been at the firm, is that really anyone is looking to outsource trade.
I would say when the outsourced trading world first started, it was definitely for the smaller managers but as we look at the past five years, we can see that there’s a need for firms of all sizes to outsource their trading. Whether they need to trade in new markets, or add on certain asset classes or cut costs.
What we’re looking to see in the next year is not only these emerging managers but also larger institutional asset managers. These larger funds may have a trading desk of 60 people, but they may struggle with a certain region or a certain market or certain strategy. They will look to outsource to a firm like Meraki with senior multi-asset traders.
Our medium client size at Meraki is about $1.5 billion, which is definitely, I believe, over a billion dollars larger than a lot of our peers in this space.
Q8: What do you think makes Meraki stand out amongst the others in the space?
I would say it’s a different sale. We’re not selling a product, but we’re selling a partnership and a service, we’re selective about our clients. We understand that we might not be for everyone. We don’t want to be the largest outsourced trading business in the world, we want to be the best. I think that there’s a big testament to the work that we’ve done over the past couple of years, especially Benjamin Arnold, the Founder and Managing Partner of Meraki.
Ben is very hands-on with the everyday functionality of the firm, and this past year, Global Custodians released their outsourced trading survey, and Meraki scored overall a 9.54 out of 10 across a few different categories, and that was Coverage, Execution, Business Model, Operations, Post-Trade, Client Services, and Onboarding.
There was an overwhelming amount of responses from our clients, which was amazing. They even made a note that we received one of the highest amounts of client responses across our peers, which was really exciting. Then a few months after the outsourced trading handbook was released, we actually received the Industry Leader award in Outsourced Trading for Coverage and Execution. I think that it is a big testament to Benjamin Arnold for sticking true with the pure buy-side outsourced trading model.
One thing that separates Meraki and excites our clients and prospects is that we have a 3:1 client-to-trader ratio, which allows our traders to only work with three firms. Whereas some others in the space, you may have one trader covering between 20 to 30 clients. When you work with Meraki, you really are getting a hands-on trader covering you at a global scale.
Q9: What has helped you succeed in your role as VP of Business Development at Meraki Global Advisors?
Listening is just as important as talking while speaking with a potential client. I want to understand why we’re having this conversation around outsourced trading. What are your current pain points? What is a goal that you want to achieve? How can we help you? And I want to hear the history of your firm and what has gotten you to reach out to an outsourced trading firm.
Listening, I would say, is probably the best advice I can give to a salesperson and that’s kind of helped me succeed in the role because I want to understand why we’re having this conversation.
I will also say sitting down with the traders any chance I get is definitely something that helps me succeed in this role. Even if it’s just analyzing a report that they’ve created for a client. Or picking their brain on something that is going on in the market. This helps me while speaking with a potential client, so I can better understand what other resources are needed out of the outsourced trader.
About Meraki Global Advisors
Meraki Global Advisors was founded with a rebellious determination to deliver truly conflict-free services to asset managers. Headquartered in Park City, Utah with offices in New York and Hong Kong, Meraki provides outsourced global multi-asset trading, leverage management, and capital introduction services to the asset management industry. Meraki Global Advisors LLC is a FINRA member and SEC Registered. Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development (646) 666-7041 mm@mga-us.com
In early February 2024, in a landmark development, Australia has ushered in a new era of workplace rights with the passage of the Fair Work Legislation Amendment (Right to Disconnect) Bill. The effect date is six month from the date the Act receives royal assent. This legislation grants employees the authority to disregard unwarranted communications from their employers outside their regular working hours, with significant ramifications for non-compliance, including financial penalties and potential legal consequences.
The impetus behind this bill, spearheaded by the Fair Work Legislation Amendment, is to afford Australian workers the right to refrain from monitoring, reading, or responding to employer communication beyond the confines of their prescribed work hours. This statutory provision serves as a wall against employer overreach and seeks to rectify instances of labor exploitation, wherein employers might seek to extract additional work from their employees without commensurate compensation.
However, it’s important to note that exceptions exist for situations deemed genuine emergencies, where prompt communication may be needed. The overarching objective remains the protection of employees’ personal time and well-being from undue encroachment by employers.
The enactment of the Australian Fair Work Amendment (Right to Disconnect) Bill 2023 is poised to reshape and shake-up operational practices, particularly with Australian Asset managers. With Australian Superannuation Funds international asset allocations edging near 50%1, fund managers are now more reliant than ever on after-hours communications with their internal trading desks. Now, they may find their ability to contact in-house trading teams curtailed. There are several potential drawbacks for Australian Asset Managers:
Missed Opportunities: Financial markets operate globally, are highly correlated, and subject to constant fluctuations. Without the ability to instantly communicate with trading teams after hours, asset managers may miss out on valuable opportunities to capitalize on market movements or address emerging risks.
Reduced Flexibility: In dynamic market conditions, particularly during times of turmoil and volatility, flexibility is crucial for effective decision-making and risk management. Limiting communication after-hours could impede asset managers’ ability to adapt quickly to changing market conditions.
Competitive Disadvantage: In a highly competitive industry, asset managers unable to establish an effective in-house trading desk with traders available 24×6 may lose clients to competitors. Competitors ahead of the curve that have addressed these inefficiencies and reduced drag on fund performance from implicit costs generated by maintaining sub-optimal trading operations, estimated on average to impact fund performance by 1.2 – 2.7% p.a..2
Overall, restriction on after-hours communication with trading teams could impede asset managers’ ability to operate efficiently, stay competitive, and meet client expectations. However, outsourced trading firms with traders situated beyond Australian borders, like Meraki Global Advisors, which operates locations in Park City, UT, and Hong Kong, could provide a solution by offering seamless, round-the-clock trading services while adhering to the legal and regulatory framework.
Meraki Global Advisors operates in multiple time zones, allowing them to provide trading services during Australian after-hours when the local market is closed. This enables Australian asset managers to access global markets efficiently outside regular trading hours. With the option to outsource trading services, Australian asset managers gain flexibility in managing their operations. They can leverage the expertise and resources of their outsourced partner to handle trading activities beyond regular working hours, enabling them to focus on other strategic aspects of their business.
Meraki Global Advisors eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. Their trading services also offer cost advantages compared to maintaining an in-house trading team for after-hours, allowing the asset manager to pass through these trading services costs no differently than the multi-manager platforms have been, while simultaneously leveling up the experience and pedigree of their trading team. This cost efficiency becomes more appealing as Australian asset managers seek to optimize operations while adhering to new regulations. By spreading their trading activities across different jurisdictions, they can mitigate the risk of disruptions caused by local regulations or market events impacting a single location.
Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development (646) 666-7041 mm@mga-us.com
Welcome to this episode of “Meet the Meraki Team.”
Meraki Global Advisors LLC, a leading global multi-asset outsourced trading firm, was founded with a rebellious determination to deliver truly conflict-free services to portfolio and asset managers. At Meraki Global Advisors, our team is our greatest asset, and today, we have a special guest to share his wealth of experience and expertise. Joining us is Mr. Simon Kelt, Head of APAC Trading of Meraki Global Advisors.
Simon Kelt has over 17 years of experience trading global markets in both Europe and Asia. He spent the last 12 years in Asia across Hong Kong and India, most recently at HSBC trading Asian equities with a focus on greater China market coverage where he helped develop and build out the business. Simon began his career in London on the JP Morgan equity swaps desk before becoming a European equities trader for Libertas Capital. He received a BCom from The University of Otago New Zealand in Finance and Economics with a postgraduate in Finance.
In this episode, Simon will take us through his journey, sharing valuable lessons learned and how each experience shaped his approach to trading and risk management.
Let’s dive right in!
“Managing a portfolio from outside the region can be a challenge, and trying to navigate the various market intricacies and structures includes risk that can be costly. We want to be an extension of our client’s desk – to be their eyes and ears where possible.”
Q1: What motivated you to pursue the opportunity in outsourced trading and led you to Meraki?
I’ve seen outsourced trading really grow in stature in recent years, and it’s been increasingly becoming a good solution for asset managers; it was well-established in the US and Europe but much less so in Asia. It always made a lot of sense to me as a good solution, particularly for asset managers who don’t have offices in the region or those who don’t have the capacity to have a full-time trader. So they can either supplement their trading or hand it over completely to devote resources to their core business and elsewhere.
I have known Ben Arnold, who set up the firm, for about 10 to 12 years. We originally crossed paths in India, where we both worked at investment banks in Mumbai, India. I subsequently covered him for a number of years when he worked for another outsourced trading business before setting up Meraki. So, when he set up the firm, it was his desire to create and offer a non-conflicted service. It seemed to him to be the most logical way to create a best-of-breed solution versus a lot of the other offerings on the street and how they operated. From the beginning, I have seen firsthand how Meraki operates and how it was received by clients and brokers as well.
In many ways, I guess I had a front-row seat to what worked best for firms seeking to outsource their trading and how this model resonated with clients across the marketplace. Ben asked me to help set up the HK office in 2020, and I really felt it was the best platform offering to clients in a space that seemed to be growing rapidly.
Q2: Tell us about your career experience and how it provides a strong base for your current role
I’m originally from New Zealand. I started my career up in London at J.P. Morgan and, after about five years trading mostly European equities, moved to Hong Kong, where I’ve been based for the most part since 2009. Basically, I’ve been mainly trading regional markets during this time, including a stint based in India for a couple of years, trading Indian equities. This is where I got some proper emerging market trading exposure, an on-ground level experience, which was certainly very valuable in understanding how these markets worked in practice.
During this time, I was able to gain experience in mostly Asian and European markets and all their complexities, market structures, and characteristics, which allowed me to have a wide knowledge base for what we do at Meraki when we trade from Hong Kong and also the early market trading session in Europe. Having a wide network of brokers and contacts across the region is certainly a very important part of the business and in achieving positive trading experiences for our Meraki clients.
Q3: What is your view on the opportunity for the Outsourced Trading space over the next 3-5 years in the Asia Pacific?
The last four years have seen some prolific growth in outsourced trading globally. There was a recent study done by Ergo, an external consultant, and they estimated that the number of firms offering the service globally is in excess of 40, up from around 10, five years ago. In a broad sense, I suppose outsourced trading and its perception have certainly changed by both investors and brokers.
On a relative basis, outsourced trading is still in its infancy in Asia compared to the U.S. and Europe. There’s really only a handful of firms in Asia offering this service so I see this business increasing in size and scope as it becomes more mainstream and as interest levels climb from buy-side institutions. We have seen some banks also launch outsourced trading businesses and have offices in the Asian region, and they’re starting to prosper and grow. We have seen the profile for this business continue to build.
We see interest from hedge funds, family offices, and traditional asset managers, all of which have different requirements, issues, and trading parameters. I certainly feel those who are providing a comprehensive outsourced trading service and a differentiated model according to clients’ needs should outperform the existing options for these outsourced trading solutions.
Q4: With the Asia live coverage desk up and running, what advantages have you been able to provide clients based outside the region?
Managing a marketable securities portfolio from outside the region can be a challenge, and trying to navigate the various market intricacies and structures inherently carries risk, and that risk can be costly at times if not managed properly. We at Meraki can work to achieve and become our clients’ desk, – to be their eyes and ears on the local marketplace ground and be able to perform as their internal trader.
Meraki advises and guides our clients on hedging solutions, keeping them abreast of local news and items not reported on Bloomberg immediately. We work to try to ascertain what’s been happening and make a portfolio manager aware even after hours if a market sector or stock is moving so that they can make decisions accordingly. We believe this can work to mitigate their risk and help them generate their alpha. Managing orders live and giving our clients the attention they need is servicing what a client needs to do.
Q5: For managers based in the Asia region, what are ways to add more alpha and performance to the fund?
Being based in Hong Kong, there’s still a lot to consider with and on behalf of our fund managers. Meraki is a resource for insight around (1) risk events, whether they be macro or stock specific, (2) understanding levels of significance for a position relative to the portfolio, (3) how a position may be impacted by something else in the region that is correlated and moving, (4) if there’s perhaps a liquidity event and giving the PM a look at that which they may perhaps not have gotten, or (5) things like running EQS screens to understand when portfolio names are overbought or oversold based on a range of different metrics.
We’re trying to highlight when they might want to adjust a position and also when things like doing some work around the borrow profile of a stock and how that may be changing and meaningful for a stock position. So all of these things we obviously try to help with, but then primarily really trying to act as a middle person to increase and enhance the fluidity of information to try and ensure what’s meaningful, what’s price sensitive is highlighted and therefore managers can make the best decision.
Q6: Taking a step further, a key edge of Meraki is its unrivaled trading experience in Asian emerging markets. With India getting a lot more focus in recent months and the recent change to T+1 as an example, how is Meraki positioned to offer the best solutions to its clients for these unique situations?
I’ve been fortunate to have lived and worked in India, and it’s certainly a very unique market that is continually evolving and can be a challenge to navigate as the industry switches to T+1. This has not been without its issues for our foreign-based clients. Given the operational challenge it presents, Meraki can help clients navigate this process.
Meraki is a direct contact between the client and the broker or the custodian, and for those that have difficulty trying to staff those local trading hours. It’s sort of 6:00 a.m. – 6:30 a.m. Meraki can assist and ease this transition and settlement process for our clients.
About Meraki Global Advisors
Meraki Global Advisors was founded with a rebellious determination to deliver truly conflict-free services to asset managers. Headquartered in Park City, Utah with offices in New York and Hong Kong, Meraki provides outsourced global multi-asset trading, leverage management, and capital introduction services to the asset management industry. Meraki Global Advisors LLC is a FINRA member and SEC Registered. Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development (646) 666-7041 mm@mga-us.com
Park City, Utah November 2023 — Meraki Global Advisors, a leading firm in the financial services industry, is proud to announce its recent win at the Industry Leaders Awards 2023 in Outsourced Trading for Coverage and Execution, presented by Global Custodian.
The Industry Leaders Awards by Global Custodian are highly regarded within the financial industry, recognizing organizations that demonstrate outstanding performance, dedication, and innovation. Meraki Global Advisors’ success in this category underscores its position as a frontrunner in providing superior coverage and execution in outsourced trading.
“We are honored to receive the Industry Leaders Award in Outsourced Trading for Coverage and Execution from Global Custodian,” said Benjamin Arnold, Founder and Managing Partner at Meraki Global Advisors. “This achievement reflects our team’s dedication to excellence and our commitment to pushing the boundaries of what’s possible in outsourced trading. Despite being the smallest firm in the competition, we have demonstrated that our size does not hinder our ability to deliver exceptional results.”
As Meraki Global Advisors looks to the future, this recognition reinforces its commitment to providing unparalleled outsourced trading solutions and maintaining its position as an industry leader.
Meraki Global Advisors was founded with a rebellious determination to deliver truly conflict-free services to asset managers. Headquartered in Park City, Utah with offices in New York and Hong Kong, Meraki provides outsourced global multi-asset trading, leverage management, and capital introduction services to the asset management industry. Meraki Global Advisors LLC is a FINRA member and SEC Registered. Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.
For more information, visit the Meraki Global Advisors website and LinkedIn page Contact: Mary McAvey VP of Business Development (646) 666-7041 mm@mga-us.com
