Since its foundation, ABC arbitrage has consistently demonstrated the relevance and efficiency of its operating model, countering the power of large financial institutions by the simple application of its fundamental principles on a single business.
These include carefully tested business practices, a systematic and industrial analysis of processes, constant innovation and creative initiatives, customized and updated production tools, systematic rethinking of operating guidelines, realistic risk assessment and a flexible and dynamic structure that fosters responsiveness. Taken together, these principles could very well form the basis of a sustainable development program for the financial industry: focus on long-term growth, application of scientific rules, adaptation to changing environmental conditions, ethical and transparent business practices, etc.
ABC arbitrage is constantly exploring new areas of improvement and development.
In a complex and unpredictable environment, it is essential to prepare the groundwork to avoid being taken by surprise. The group has demonstrated its capacity and talent to do just that since 1995. ABC arbitrage’s philosophy is clear: always have the resources to benefit from unforeseen market behaviour and never be subjected to its vagaries by never being subjected to the rise and fall of stock fluctuations. Its upstream preparation process focuses on two complementary factors.
First, the group is constantly on the outlook to identify and take advantage of changing market opportunities: geographical expansion, product diversification and optimal operational practices. Second, inside the company, teams develop innovative technique, transform these into applicable industrialized tools and, ultimately, identify high-potential strategic opportunities.
Financial markets are constantly producing unexpected events, sometimes euphoric, sometimes listless and sometimes depressive. Whatever the conditions, the ABC arbitrage group has always managed to produce positive results, thus confirming the relevance of its model and the company founders’ belief in a “pragmatic and scientific” approach to financial dealings.
ABC arbitrage has demonstrated that it is possible for an independent investor, exclusively focused on arbitrage, to be a serious market player and to produce regular profits largely above benchmark levels.
While some market operators dread turbulent times, ABC arbitrage has shown it has the talent and the skills to benefit from unsettled market conditions. Its main strength is its fine-tuned financial engineering system and its balanced diversification in various arbitrage types and geographical areas. This is combined with its highly-industrialized processes, its creative and innovative mindset, its ability to adapt to all market conditions, its strict risk management policies and its customized IT tools.
ABC arbitrage is a people-sized organization, with less than 90 employees;
The extent of position-taking is known, controlled and consistent with potential commitments;
ABC arbitrage is involved exclusively in the arbitrage business, in which it has developed exceptional expertise.
ABC arbitrage only trades in listed products;
Market access security techniques do not allow any one individual to go beyond certain limits;
The “4 eyes“ control policy means that traders are all part of a team and are never alone in making decisions.
Separation of duties: it is impossible for a one person to follow all stages of a single transaction. All departments are involved, including the decision-making support departments;
Numerous cross-functional reports are produced, immediately revealing any inconsistency;
Reconciliations are carried out daily with financial partners;
Ratios are monitored and analyzed on a daily basis and several times a day during hectic periods.
Controllers’ bonuses and profit sharing schemes are not determined by the Business Units, but by Executive Management;
Bonuses are staggered and full bonuses are not delivered until accounts have been audited and profits have been verified;
People in operations and decision-making support benefit from equity-based medium and long term bonus schemes, rather than annual cash bonuses.
ABC arbitrage considers that SMEs are an essential source of innovation and economic development.
In particular, the group’s executive management is particularly focused on employee profit-sharing schemes as a driving force for growth and opposes certain constraining measures applied to business. Its position in these matters is clear: although regulation is necessary, it should avoid blanket measures and not impose rules that hinder economic development.
ABC arbitrage is a member of MiddleNext (www.middlenext.com), an independent French trade organization, which unites and mobilizes about hundred small and medium listed companies (equity value of less than €2 billion). MiddleNext is fully recognized as the leading trade body to defend the interests of MidCap companies in their dealings with market authorities, public institutions and European bodies.
The main aim of MiddleNext is to propose practical solutions for the economic, financial and market environment of listed companies. Its role is essentially to do away with inefficient regulatory constraints and obstacles imposed by public authorities or special interest groups.
ABC arbitrage takes also part to Croissance Plus (www.croissanceplus.com), a professional trade organization of entrepreneurs which unites the managers of fast-growing companies and their partners. Its members operate in all sectors of the economy. Through Croissance Plus, company managers advocate a new entrepreneurial model, support the creation of new businesses and employment opportunities, while encouraging fair compensation practices to share the value generated by growth.
As a company committed to improving the environment, the ABC arbitrage group has always made an effort to increase staff awareness on the issue of environmental responsibility. This commitment is perfectly in line with the group’s fundamental principles, i.e. that collective action is always more positive and efficient than individual effort.