Shanghai-based cryptocurrency manager Point95 Global to launch quant hedge fund along with Hong Kong firm

Blazing a trail for virtual assets investment advisers looking to expedite the launch of funds in Hong Kong, Shanghai-based digital asset management firm Point95 Global said on Tuesday it plans to debut a multi-strategy crypto-quantitative fund in partnership with a licensed asset manager in the city.

Co-founder and chairman Ye Jingyuan said Point95 Global plans to partner with a Hong Kong asset manager, whose name he did not reveal. The company concerned has licences for asset management and dealing in and advising on securities issued by Hong Kong’s Securities and Futures Commission (SFC). The private fund, targeting professional investors, will be based on a quantitative hedge fund strategy that makes use of complex computer modelling and algorithms to seek arbitrage trading opportunities across different cryptocurrency asset classes.

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Ye said Point95 Global, which has a trading team of 40 people based in Shanghai and just opened a new office in Seoul, will act as a sub adviser for the quant hedge fund, which will be domiciled in the Cayman Islands. The Hong Kong asset manager will act as fund distributor and will manage the fund, whose initial size will be US$30 million.

“We are aspiring to be one of the first crypto quantitative fund platforms that are compliant with the Hong Kong securities regulations, by operating with the right licences. Institutional investors will have more confidence in the crypto asset market if industry players can demonstrate how assets are managed and safeguarded,” said Ye.

Point95 Global plans to launch the fund before the first quarter of 2019. The launch will follow the introduction by the SFC recently of a set of regulatory standards governing the management of virtual asset portfolios. The regulations set licensing conditions for managers of portfolios that are invested in virtual assets amounting to 10 per cent or more of the portfolio’s gross asset value.

Until recently, firms that managed funds invested in cryptocurrencies, such as ethereum or bitcoin, were not required to apply for “type 9” licences, which govern asset management.

Point95 Global’s trading team has been running its cryptocurrency arbitrage strategy, using its own seed money totalling US$3 million, since April. The fund trades the top 10 cryptocurrencies in market capitalisation, and uses algorithms to seek arbitrage opportunities on cryptocurrency trading pairs across different exchanges.

Arbitrage trading strategies, such as those for relative value, seek to profit through the simultaneous buying and selling of related instruments, often by taking long or short exposure on these instruments and across different markets.

Ye said the fund will also trade across cryptocurrency spot and futures markets.

Before setting up Point95 Global, Ye was the vice-president of the global market division of Bank of America Merrill Lynch in London, where he was in charge of the risk and portfolio management of equity structured products.

Point95 Global’s cryptocurrency fund launch will come at a time when blockchain and cryptocurrency asset advisers are increasingly setting up offices in Hong Kong. In September, the South China Morning Post reported that Grandshore Technology Group, a Hong Kong-listed blockchain investor backed by the Hangzhou municipal government, was also planning to raise cryptocurrency funds.

Grandshore Technology, which does not have an asset management licence, plans to raise a Hong Kong dollar private equity fund through a partnership with third-party managers that have type 9 licences.