TheChek News Flow

Juncker considers creating financial services tsar

A new EU financial services tsar charged with regulating the City of London and ensuring financial stability in the region would be appointed in Brussels under new plans being considered by Jean-Claude Juncker, the incoming European Commission president. Mr Juncker is weighing the creation of a powerful standalone finance directorate, which some London-based banks fear will tilt wider EU financial policy towards the eurozone. The plans to give a single commissioner a united financial services portfolio comes at a critical time for the industry, with the commission implementing a large number of post-crisis financial reforms as Europe’s banking union finds its feet. At present EU financial regulation is overseen by Michel Barnier, the internal market commissioner and former French foreign minister. While finance reform has dominated his workload, he was also responsible for developing the 28-nation common market, covering issues ranging from copyright rules to licenses for ski instructors. Senior officials say the new finance directorate would probably move banking and markets units from Mr Barnier’s department, and combine them with the financial stability unit stripped from the department for Economic and Financial Affair. Carving out another coveted senior job increases Mr Juncker’s options as he attempts the near-impossible task of divvying up commission portfolios without offending member states vying for influential posts. There remains doubt over the exact form of the new department and a final decision has yet to be taken. Detailed plans were drawn up five years ago to separate financial services from the internal market portfolio but were ditched at the last moment. No frontrunner has yet emerged for the job but potential candidates include Jyrki Katainen, the former Finnish prime minister, Jeroen Dijsselbloem, the Dutch finance minister, and Valdis Dombrovskis, the former Latvian prime minister. Banks fear that without an anchor in the department for the single market, financial services rulemaking would be skewed towards the demands of the eurozone. While euro area states often disagree on policy, as a group they will soon wield an effective majority to pass laws over the objections of non-euro states. In a recent internal analysis paper on "eurozone caucusing", the British Bankers' Association said it was "of utmost importance to maintain the structure of the relevant commission services dealing with financial services so that their work is permeated with the priority of preserving the single market focus". "We suggest that the UK government should proactively defend the unity of [the internal market directorate] and oppose any plan to move financial services units out of it," the report added. Others see the reconfiguration as a way to focus the commission more effectively. Nicolas Véron of the Peterson Institute think-tank sees "little synergy between financial services and the rest of the internal market" and argues the cohabitation meant single market work was neglected during the financial crisis. While British officials are alive to the risks of the new financial services commissioner favouring the eurozone, they are relieved the finance portfolio is not being handed to the economic affairs commissioner, whose work is heavily dominated by the euro area.

Israeli Hedge Fund Harnesses Big Data

{http://www.finalternatives.com/node/27757}

Apica Green is a multi-million dollar Israeli hedge fund that is based in Tel Aviv and has 360,000 researcher/analysts.

If you're picturing the HR nightmare this would entail, relax: those thousands of researchers and analysts aren't actual employees of the firm, they're people who share their investment tips online. And boy do they share-Apica Green has captured millions of online investment recommendations since 2004, thousands per day, from a wide variety of sources including both financial sites and social media outlets.

The fund, which focuses on equities, ETFs, and options, was founded by brothers Amit <http://il.linkedin.com/in/greenamit> and Ido Green with the backing of financiers Gaby Ravid and Daniel Silbiger. The Green brothers, who manage Apica, have been exploring the possibilities of Big Data for some time-Amit led a team that designed and implemented classified network communication technologies and developed real-time network communication analysis systems for the Israeli Defense Forces before serving as a senior advisor in network management and software engineering at Israel's Bank Leumi.

Ido was previously a developer advocate at Google, working with the firm's business development, product management, marketing and PR teams. He has also launched several successful startups of his own.

The two began gathering data for their trading system in 2004; by 2008 they were operating with real money; and in July 2013, they formally established the Cayman-based fund which, as of June 2014, was up 13%.

Rock Stars

The key to Apica Green's system is not so much the volume of data it captures, which is impressive, but the way it is able to search that pile of data for valuable trading tips.

The software doesn't give equal weight to the advice of all tipsters. Instead, the firm uses proprietary technology to create a detailed score card for each analyst/trader-ranking them by criteria like accuracy, yearly return, average return, industry, etc-which allows it to winnow hundreds of thousands analysts down to 30 "Rock Stars."

What's interesting about Apica's Rock Stars, Galia Ron, the firm's business development and senior director, told FINalternatives in a recent phone interview, is that since Apica Green began trading with real money in 2008, 70% of the Rock Stars have remained unchanged.

"Not necessarily that they are professional analysts," said Ron of the Rock Stars. "They're accurate and...they like it and...they put their recommendations out there. People ask us, 'Why would they share their recommendations?' Well, it's exactly why they share what they eat and what they wear, how they're feeling today-people like to share."

Apica's technology is sophisticated enough to distill a recommendation out of a several-hundred word article or blog post, said Ron. It can also distinguish people who are followers from those who are actually generating ideas.

And the technology doesn't stop with the Rock Stars-Apica also analyzes the companies they recommend, ranking them on fundamental inputs as well as the Rock Star's thumbs up. Each company is given a quality score, helping the fund determine whether (and how much) to invest.

At this point in the process, automated system recommendations are fine-tuned by human analysis: macro sector allocation, micro stock fundamentals and risk analysis.

Apica, which has a capacity to run $600 million, is currently fundraising, with roadshows in Europe and the U.S.

The fund's auditors are Ernst & Young, the administrator is Orangefield, the prime broker Interactive Brokers and legal counsel is Fischer Behar Chen.

Apica Green's minimum investment is $1 million, fees are 2% and 20% and liquidity is quarterly after a one-year lockup.