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

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…