UBS has launched a new prime-brokerage-and-more service for quantitative hedge funds as it seeks to grow its business.
The new unit is called UBS Quant HQ. It combines prime brokerage and capital-raising services with consulting expertise on technology, critical to quantitative strategies. Quant HQ clients can choose from four tiers of execution services, from low latency to ultra-low latency, Bloomberg News reports. Whichever they choose, orders will be sent within 60 microseconds, including time for risk filters and mandatory checks.
The new business is designed to bring new clients into UBS' prime brokerage. It is led by Scott Stickler from New York.
"This is a new client acquisition endeavor," Stickler told Bloomberg.
"One of the trends we're seeing is a number of startups, folks coming out big banks because of the Volcker rule and starting their own hedge funds," Stickler added. "Clients are coming to us who wanted us to be in this business and who want to be able to take advantage of our global presence and our counterparty safety, stock-loan and execution capabilities."
Initially, Quant HQ will handle stocks, options and futures and focus on long/short and arbitrage strategies. It plans to add fixed-income and foreign exchange capabilities in the future.
Stickler has been working with about a dozen hedge funds since the second quarter to prepare for Quant HQ's debut. The service will include "strong risk-management systems and procedures" and systems that will allow UBS to provide more financing during the trading day to funds that need more leverage.
"Some funds may require more leverage intraday and more systems to monitor that," Stickler explained. "We're now able to right-size leverage based on the strategy and the hedged nature of the strategy."
In addition to Stickler, Quant HQ has a pair of regional heads: Dave Mishoe will head up the effort for Europe, the Middle East and Africa, and Steve Hammerton for the Asia-Pacific region.