Chris Cotterell, Managing Director of Finalto Australia, talks with Hedge Funds Club’s Stefan Nilsson about moving back to Australia, lessons learnt as a risk manager, hedge funds’ concerns about access to prime services and his priorities for Finalto in Australia.
Following an international career in finance, at the end of 2021, you relocated back home to Australia. What brought this on? Were you ready to go home and suddenly a terrific opportunity with Finalto in Sydney walked through the door?
Yes, I was ready to come home to Australia. I spent 18 years in London with a stint in the Cayman Islands, so it was a long time to be abroad. I have been with Finalto (previously CFH Clearing) since 2017. The company has always been very supportive of me and my family and I had an open dialogue, with management, about my desire to represent the brand in Australia prior to Covid so once the opportunity presented itself, I jumped at it.
Your first job with Finalto was as a risk manager in London. How has being a solid risk manager prepared you for running the firm’s Australian business?
Being a risk manager means you have full visibility on what is going on around the firm. You need to be able to understand each department and how it can achieve its goals and objectives and what risks may present themselves to prevent this. You then need to build a strategy to mitigate or eliminate potential risks. So, through the risk management process I built up skills in all key areas of the business from the front to back office. I took a holistic view of risk management which I have brought to the Australian operation to ensure all areas are driving the business and not just focusing on one area and neglecting others. I particularly enjoyed credit and counterparty risk. On the counterparty risk side, you really get to know a client’s business and understand what they are trying to achieve, their limits and how you can best serve this through improved trading conditions. One area I focused on was the need for the company to be more competitive with our leverage terms to clients. We then built an offering that is extremely competitive but sustainable over the long-term. The flexibility of our inhouse built systems and risk management controls meant we were able to implement this in a responsible way and provide more favourable trading terms to our end clients.
You have made some quality hires in your Sydney office. Now that you are properly up and running with a core team, what’s the plan for the Australian market? What are the priorities?
Our priorities are to continue to provide a great service to our existing client base while expanding the Finalto Australia brand into the private wealth, HNWI, hedge fund and banking sectors. We have heard our hedge fund clients’ concerns regarding access to prime services, and we see this area as a space Finalto can fill with its large balance sheet and over 15 years of service to the hedge fund community across our global offices. We are also continuing to promote the key benefit of efficient and stable access to our multi-asset liquidity through our regional connectivity hubs in Singapore, London and New York. Cal Portway joined us this year and he has extensive experience in servicing institutional FX desks both at banks and private firms. He is very well respected in Australia, Hong Kong and Singapore and is a key hire for us in our push to service the institutional client space.
One of your recent senior hires, Chris Xu, VP of Institutional Sales, has a wealth management background rather than a brokerage background. Is this a deliberate move to acquire more expertise in the family office and wealth management space?
Yes, it was deliberate. Chris Xu is very well respected within private wealth and has joined us to help Finalto Australia diversify its client base. We see private wealth as a growth area because recent data suggests that there is a significant number of high-net-worth individuals relocating to Australia due to its proximity to the Asia Pacific region combined with a great lifestyle, excellent healthcare and education systems. Finalto has established itself in the region through regulation in Australia and Singapore and we have recently added connectivity capability in SG3 to bring increased execution speed, reliability and stability to our regional clients.
You recently were one of the sponsors of the Sydney Hedge Funds Club evening. As we have seen some new local hedge funds emerge, what’s your prediction for the future of the Australian hedge fund industry?
Yes, we enjoyed sponsoring the Sydney Hedge Funds Club event recently. The turnout was great and it’s good to see some new funds emerging. If, as predicted, there is a continuous inflow of private wealth to Australia, then this will benefit local hedge funds as long as there are positive market conditions. However, I think there is still significant uncertainty in the economy due to domestic fiscal policy. Geopolitical and other macroeconomic factors will play a large role in whether we see an economic downturn or not which may affect hedge fund performance metrics. Either way though, Finalto is here to provide a quality service to our clients whether they employ long, short or speculative strategies or if they need technology that can support their algo and risk management needs.