Michael Bodley

<div id="highlights-block_6290d97003626" class="highlights">
 <ul>
 <li>The firm is in talks with a number of other crypto-native service providers to strike partnerships</li>
 <li>Though the crypto trading industry is crowded, Meraki is betting its existing hedge fund clients looking to get into digital assets will give the firm a leg up</li>
 </ul>
 
</div>



A traditional finance outsourced trading operation that dabbles in everything from equities to structured products is entering the cryptocurrency arena.&nbsp;



Goldman Sachs veteran Ben Arnold’s Meraki Global Advisors has been building out its initial crypto book with a small number of digital-asset-focused hedge funds and plans to expand further into the space in short order. <a href="https://merakiglobaladvisors.com" target="_blank" rel="noreferrer noopener">The venture</a> is one of the first — if not the inaugural — traditional finance outsourced trading firms entering digital assets.&nbsp;



Park City, Utah-based Meraki is also in the process of inking a number of partnerships with crypto-native operations, including Mike Novogratz’s Galaxy Digital. Arnold and his team are aiming to start by executing spot crypto trades during US trading hours, with plans to expand in Asia down the line. The firm already has a presence in Hong Kong and New Zealand.



There’s also a plan for a capital-introduction-like service to help crypto natives with promising strategies who lack the requisite expertise to woo institutional investors and the Wall Street crowd more broadly.&nbsp;



Institutional investors’ moving into crypto has brought with it the demands for solid service providers considered a prerequisite for traditional finance hedge funds — which Arnold said he sees as an opening.&nbsp;



<div class="wp-block-image"><figure class="alignright size-medium"><img loading="lazy" decoding="async" width="300" height="300" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg" alt="" class="wp-image-22122" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Michael-Ashby-300x300.jpg?w=50 50w" sizes="(max-width: 300px) 100vw, 300px" /><figcaption>Michael Ashby, Meraki chief operating officer</figcaption></figure></div>



Michael Ashby, Meraki’s chief operating officer who is leading the crypto effort, said an increasing number of hedge funds are becoming “crossover funds,” or introducing crypto to their stock-trading strategies.



Considering the value of new launches in traditional finance has shrunk in the past couple of years as deep-pocketed limited partners redeem funds from underperforming portfolio managers, digital assets offer Meraki another revenue stream, according to Ashby. The firm’s median client now oversees about $1.3 billion in assets under management.&nbsp;



Meraki has about half a dozen incoming or trial clients.&nbsp;



Traditional finance veteran Duncan Simmons, who is prepping his own digital assets-focused hedge fund launch, said he’ll be one of Meraki’s first clients once his startup kicks off trading. <a href="https://cms.blockworks.co/stock-picking-vet-rolling-out-crypto-hedge-fund-with-research-heavy-approach/" target="_blank" rel="noreferrer noopener">Simmons’ venture</a>, Aqxa Research, plans to start trading this summer.&nbsp;



Simmons, who previously worked in stock-picking roles for firms including Coatue Management and Iridian Asset Management, said if launching a traditional finance-focused hedge fund is “difficult,” then getting an institutional crypto strategy off the ground is “extremely difficult, given the immaturity in the industry.”&nbsp;



“Service providers and the trading ventures are fractured,” he said. “So, that all has to be solved with people…having a service provider that can give you that kind of service is extremely useful.”



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TradFi Outsourced Trading Firm an Early Entrant to Crypto

<div id="highlights-block_6291134ae2622" class="highlights">
 <ul>
 <li>The startup is run by the latest Wall Streeter to find success personally investing in crypto, before giving their own fund a shot</li>
 <li>The firm plans to kick off its fundraising efforts at a crypto conference in Miami next week </li>
 </ul>
 
</div>



A veteran stock-picker is the latest traditional financier to give crypto a try. 



Duncan Simmons, who previously spent time at equity-focused Wall Street stalwarts Coatue Management and Iridian Asset Management, is entering capital-raising mode for his Aqxa Research, the founder and CEO told Blockworks exclusively.



Simmons’ first stop: the iConnections <a href="https://iconnections.io/" target="_blank" rel="noreferrer noopener">Digital Assets Forum</a> in Miami next week, where institutional investors angling for crypto exposures will mingle with up-and-coming managers. The plan is to commence trading the new vehicle sometime this summer.



<div class="wp-block-image"><figure class="alignright size-medium"><img loading="lazy" decoding="async" width="300" height="260" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg" alt="Aqxa Duncan Simmons" class="wp-image-22123" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=297 297w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=301 301w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=253 253w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Headshot2-IMG_8418-300x260.jpg?w=50 50w" sizes="(max-width: 300px) 100vw, 300px" /><figcaption>Aqxa&#8217;s Duncan Simmons | Source: Aqxa</figcaption></figure></div>



While Simmons’ fundraising aspirations are unknown, he’s already assembled a staff of five professionals with crypto experience — likely a bellwether of a substantial amount of day-one capital. The portfolio manager is in the process of finalizing service providers; he’s selected Goldman Sachs vet <a href="https://cms.blockworks.co/meraki-global-advisors-an-early-entrant-to-crypto/" target="_blank" rel="noreferrer noopener">Ben Arnold’s Meraki Global Advisors</a> to handle outsourced crypto trading.



<a href="https://www.aqxa.io" target="_blank" rel="noreferrer noopener">Aqxa</a> is fine-tuning a research-intensive approach to probing digital asset markets for alpha. 



The approach involves a two-tiered org chart consisting of analysts — who establish macro themes and “what the question is” — as well as so-called “community researchers,” initially a global network of contractors tasked with conducting research on the likes of Discord, Telegram, Twitter and, of course, by learning the nooks and crannies of the protocols themselves.&nbsp;



The firm also plans to invest in early-stage tokens and is testing an on-chain analysis procedure that taps quantitative algorithms to determine asset weighting, based on volatility, trading volumes and related factors. Analysts with quant experience are tasked with rating either long or short bets on a one to five conviction scale, which feeds into how much of Aqxa’s overall book each position accounts for.



Higher-conviction, more surefire wagers, however, may be downgraded below more dubious prospects, depending on market conditions.&nbsp;



Pulling the trigger on investments is done manually — not using algorithms — via Simmons’ bread and butter: discretionary, fundamental trades.&nbsp;



Those investments, primarily, are made up of long and short plays in some of the most liquid cryptocurrencies — as well as dabbling in decentralized finance (DeFi). Simmons is also considering adding private venture capital- or private equity-style opportunities to the vehicle’s investment mix down the line.&nbsp;



Simmons, who started investing personally in bitcoin in 2017, “floated the idea” of starting up a crypto trading business at a previous firm, but compliance and other back-office functions, as well as risk controls and tolerance, nixed the venture before it got off the ground.&nbsp;



“I’m adopting the value-add research model that I was trained on,” he said. “It takes using deep, fundamental research, [as well as] engaging with management teams, developers, users and other stakeholders — actually using products ourselves, as well as doing the strategic analysis of how various projects fit into the ecosystem.”



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