A multitude of functions – operational, decision-making facilitation, control or support – are all dedicated to a single profession: arbitrage.
Discover how these different functions work within the ABC arbitrage group and how they contribute to the business.
Financial analysis (Research and analysis department)
The goal of this function is to research, classify, analyze and disseminate all the necessary information to properly carry out the arbitrage business. Analysts are also in charge of integrating their findings into the information system whenever new events are detected.
The department has two operating units:
- The equity appraisal unit gathers, organizes and disseminates relevant information concerning companies and financial instruments which have arbitrage potential and which should be monitored;
- The analysis unit carries out research, interprets data and processes relevant information to enable the execution of arbitrage strategies.
Working closely with the research department, market operators identify and develop new strategies, which they then apply in the financial markets.
The department has several business units, which deal with the different strategies carried out in the two main arbitrage families.
Middle/Back office (Financial operations department)
Financial operators handle equity management and manage the commercial relations with financial counterparties, coordinating the infrastructure and the operating accounts of the company. This department, linked to all operational functions, is divided into three operating units:
- The Prime Brokerage operating unit is in charge of managing assets produced by arbitrage operations, which are financed through Prime Brokers;
- The Cash Management operating unit decides on the allotment of deployed equity;
- The Financial Instruments Operations unit manages events (dividends, public offerings, etc) linked to the instruments in the portfolio.
The group designs and develops its own tools for operating the business, which allows it to be highly responsive to IT developments and to ensure that the information system is perfectly integrated into the business and consistent with its goals.
The mission of its IT engineers is:
- To design and deliver relevant IT tools (writing specifications, tests, rollout, maintenance);
- The storage of data and the development of interfaces needed to carry out business;
- The development and maintenance of tools for accessing data and the consistency of the information system.
Research (Statistical Analysis and Modeling department)
The purpose of this function is to deal with all the mathematical issues needed for operating the business. This means, firstly, carrying out the statistical surveys and studies involving the quantitative analysis of the financial environment, with particular emphasis on the products and instruments which are at the core of the business, such as M&A activities. Secondly, this unit carries out the modeling and pricing scenarios of derivatives, such as convertible bonds and options.
This key support function for operations is responsible for understanding and controlling market rules, in France and abroad, to provide legal analysis of the financial and stock market regulations of the markets and countries where ABC arbitrage operates, to monitor changes in the law and to capitalize on the knowledge of regulatory requirements and practices.
Network/IT administration (Information technology department)
This department ensures the proper functioning and security of the connections between the group and its service providers. It studies the technical feasibility of new needs and ensures their rollout, while monitoring development trends and the performance of information management service providers.
It also administers the network, including the technical management of in-house servers and the data screens of the trading rooms.
In addition, this department ensures:
- The deployment and monitoring of IT systems and standards in-house;
- The functioning, upgrading and security of the IT network (Internet, electronic messaging, etc.), IT equipment, telephony and office tools.
Market risks (Risk management department)
This department is responsible for identifying relevant business-related risks for the group (operational risks, counterparty risks, etc). It closely monitors that exposure limits are complied with, according to the management policy related to different instruments (outstanding engagements, hedging, diversification, etc). It carries out stress tests on the various portfolios and evaluates their maximum loss potential individually or globally.
Internal control (Finance/Internal control department)
This department ensures that proper measures have been implemented and complied with to guarantee that assets are protected and that associated data is reliable, thus ensuring both security and efficiency in operations.
It also makes sure that operational units are aware of risks inherent to their activity and that management procedures are reliable and respect the strict separation of functions between production and control. The department pays particular attention to compliance with ethical standards, in conjunction with the Market law department.
It is also in charge of financial control within the group, responsible for validating accounting declarations that have been entered into the information system, either manually or automatically, by the operational departments.
Finally, the department handles administrative accounting, which includes social security payments and tax management.
Corporate law (Legal and tax department)
The legal team provides corporate supervision services, while managing contracts and keeping track of legal and tax developments that impact the group.
The Communication department is responsible for the four main areas of corporate communications: group communication strategy, internal communication, job market communication (development and implementation of recruitment campaigns, interfacing with media and candidates) and financial communication (shareholder and investor relations and communication designed to support the ABC arbitrage share price).
The Human resources department manages all human resources management functions (contracts, payroll, benefits and profit-sharing, daily support of staff, etc.). It works with senior management to develop and implement employee benefits policies.
Office management (General support services department)
The General support services team is responsible for providing staff with everything they need to facilitate their work on a daily basis. It selects the group’s main suppliers and handles negotiations with them to ensure that ABC arbitrage offers its staff a pleasant working environment. The team also provides day-to-day assistance to members of Executive Management and of the Board of Directors.