Capstone Snaps Up Distressed Derivatives Portfolio

Oct 31 2007 | 9:21am ET

N.Y-based asset management and proprietary trading volatility arbitrage specialist Capstone Holdings Group has acquired part of the distressed derivatives portfolio formerly held by RV Capital.

"This has been a difficult and challenging situation for RV Capital. However, we are pleased to be able to acquire these assets and provide liquidity for a distressed portfolio," Paul Britton, CEO of Capstone, said in a statement.

RV Capital, the London-based derivatives market maker, was founded by Jerome Roussel and Duncan Valentine in January 2006 to provide liquidity in derivative products to banks and brokers, according to its Web site. The self described "number one market maker on fixed income options on Eurex and on Liffe" ran into financial difficulties after the credit crisis in August 2007.

The problems at RV reportedly stemmed from bets made mainly in sterling interest rate futures and options, according to Nick Wood, the firm’s court-appointed administrator and partner at Grant Thornton. In an interview, Wood said the firm “had been trying to recover their long positions from their short-term trades which were profitable. But their long-term positions got pummelled and their margin calls were increasing and they didn’t have the liquidity to meet them.”

The firm is facing a loss of €15 million to €20 million (US$21 million to $28 million).

RV Capital’s financial woes have prompted the London International Financial Futures and Options Exchange to declare the firm to be “a defaulter” – which is the first time the exchange has taken such action since 1998.


In Depth

bfinance: Fees Falling Across Asset Classes, Yet Overall Investor Costs Still Climbing

May 16 2017 | 9:53pm ET

Despite unprecedented attention on fees, new research from investment consultancy...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Risk-Based Compliance: Why Oversight Of Outsourcing Is Critical

May 10 2017 | 7:02pm ET

Compliance is notoriously one of the trickiest middle office functions for funds...

 

From the current issue of