When traditional issuers launch financial products, this was a lot like a black box, says Patrick Loepfe in the interview. With his company Gentwo, he now has a remedy for this, using a new kind of securitisation platform.
Patrick Loepfe, you launched a securitisation platform for structured products in early 2018. What can this tool do?
Our platform is aimed at setting up specific and customised off-balance sheet emission vehicle for customers, enabling them to represent tailor-made products independently of banks and manage these products on their own. This provides the highest measure of transparency and flexibility for the customer at the best price and without the issuer risk of a bank.
What actually prompted you to found the company Gentwo for this purpose?
When traditional issuers launch financial products, this is a lot like a black box in which fees and risks mount up that make the products needlessly more expensive. At the same time, the customers of established issuers can pursue their personal strategies only to a limited extent in consequence of the pre-defined structures.
We saw a great need for action here, which resulted in the idea and implementation of an independent, flexible and affordable setup for securitisation and issuance.
Who are your target customers?
We are targeting all financial intermediaries, foremost independent asset managers and private banks. But also, family offices and real estate companies are among our customers.
Which securitised products are particularly well suited for your platform?
With our «setup», all bankable and non-bankable assets can be securitised. This range covers liquid bonds, structured products of all other issuers, from private equity, art, diamonds and commodities to crypto investments.
Besides normal securitisations, primarily our option to integrate the aforementioned assets in actively managed certificates (AMC) is also in high demand. We have already accomplished to build up competency in almost all asset classes and we are continuously adding new fields of application.
What are Actively Managed Certificates (AMC)?
Contrary to passive index certificates, AMCs permit securitising an active portfolio strategy and make it investable. Based on this dynamic structure, AMCs are suitable for particularly innovative ideas.
Therefore, the issuer’s flexibility plays an increasingly important role. This flexibility influences the possibilities in the investment strategy in terms of the frequency of transactions, the investment universe and the kind of implementation.
Philippe Naegeli (picture below), since very recently, Gentwo operates an independent AMC platform jointly with CAT Financial Products. What does it do? Gentwo and CAT Financial Products are now together the first independent financial service provider worldwide that operates its own platform for the issuance of actively managed certificates.
Based on our issuance and securitisation setups, and the us Interactive Brokers technology, this platform sets a new standard. In concrete terms: It permits strategy managers to implement the fastest and most customised investment strategies at minimal costs.
What are the strategies that can be implemented with it?
As a new possibility, also all kinds of options or futures trading strategies and even intraday trading systems can be implemented besides long-only strategies. AMCs that map strategies involving futures, options and/or forex can be launched this way via one integrative platform. The strategy manager thereby gets access to the Interactive Brokers platform.
With interfaces for automated trading strategies, this enables 24-hour access to the markets without limitation on the number of trades per day. The platform permits new strategy managers to offer their trading strategies transparently and efficiently in a daily tradeable certificate.
You have already mentioned the cooperation with the U.S. online broker Interactive Brokers. What is your approach in this?
As of this month, we are integrating the trading and depositary technology of Interactive Brokers. We are uniting Interactive Brokers’ leading electronic trading platform when it comes to price, product diversity and risk control with the most flexible and affordable issuance solution of Gentwo.
Based on this cooperation, CAT Financial Products has received the opportunity to organise and launch the world’s first AMC platform.
Back to you, Patrick Loepfe, which aims have you set for yourself and on what timeline?
Since we launched Gentwo in February, events have been developing at race pace. The planned organisation has grown exponentially and with various milestones to follow now that we can line up back-to-back.
For this purpose, we have also increased our personnel from four to currently 15 employees within six months and we will continue to expand. We generally aim for broad growth and are negotiating further joint ventures in various sectors. We believe that there is a lot of potential in the crypto segment. We will soon make headlines about this!
You have worked for a long time at large financial institutions. Being independent, what is better now and what is more difficult?
That is quite simple. We start at the base. We see Gentwo as a purpose-oriented organisation. We handle and concentrate on the true problems and needs of the asset manager and his customers. We make our money by solving problems and not by «complicating» things.
Does the Swiss financial marketplace provide good conditions for the preparation of structured products?
Switzerland has undisputedly a great competence in the financial sector. This is based on the many years of experience of banks and regulators – but probably most of all on the unique expertise and the tremendous dedication of the people working in this field
Patrick Loepfe worked for almost twelve years for the Zurich bank Vontobel. The mathematician is regarded the mastermind being the Deritrade platform of the institution. He left the company at the end of 2015 to follow independent endeavours together with Philippe Naegeli, an investment banker, who had worked most recently for the U.S. trading bank Forstmann & Co. as Managing Partner. The founded the company Gentwo together in early 2018.