Lynceus Partners reports €600m issuance volume in one year

Patrick Chotard, chief executive at Lynceus Partners, has been involved with structured products since 2011 when he joined BNP Paribas as a member of the structured products sales team in France and Belgium. Chotard left the French bank to join an independent boutique as a cross-asset investment solutions sales associate in Switzerland, before he went ‘solo’ to launch the independent investment boutique and fintech for asset managers and private banks, specialised in alternative investments, in the summer of 2017.

“After a short stint at a specialist wealth management boutique, I decided to launch my own venture,” said Chotard. “We launched Lynceus a year ago and we’re now going to hire our fifteenth employee,” said Chotard. “We have grown organically and we have been cash flow positive every month since we launched. This has enabled us to sustain a number of initiatives (headcount increase) and operational expenses.”

Lynceus is in the business to business to consumer (B2B2C) business targeted at the structured products buyside, according to Chotard. “We work closely with wealth managers – single- and multi-family offices, independent fund and asset managers and some private banks,” he said. “Our focus is on bringing value throughout the investment process.”

The company’s offering philosophy is based on a three-pillar approach which research as a cornerstone, according to Chotard. “We have a research team that publishes updates every month to highlight investment themes that can generate alpha to our clients,” said Chotard. “This is a very important part of our offering, as it provides ideas for investment and helps us leverage our capabilities and knowledge of the markets.”

Secondly, the company is a brokerage for structured products focusing on the ‘beauty contest’ and identifying the most competitive products. “Our headquarters is in Switzerland, but we also have an office in France, which is within the reach of Mifid,” said Chotard. “This is an added-value for our clients, as we can operate in various jurisdictions. Moreover, in the spirit of equal treatment for all of our clients, we work transparently, disclosing all our actively, although we’re not obliged to do so in Switzerland.”

“We have done over €600m of issuance through our platform in the first year,” said Chotard. “The quality of the issuers using the platform is testimony to the quality of our offering. We had feedback from a particular bank, which also has its own issuing platform that was very encouraging. Providers out there value transparency in pricing and a straight-forward fee structure.”

Opacity around fees has contributed to the bad press around structured products, and the company does not want the pricing of the products it distributes to be an issue. “We want our clients to be aware of how much we charge for each transaction upfront,” said Chotard. “This is one of the most controversial areas in structured products, and there are still brokers and intermediaries out there that operate under a ‘black-box’ approach, which continues to tarnish this market.”

“We believe in nurturing customer stickiness and, to achieve this, you have to be transparent,” said Chotard. “We charge 20bp for each trade, which has played in our favour and brought in more transactions. We want to move away from the old hit and run approach, and market players appreciate that.”

According to Chotard, there are still ‘smooth operators’ out there that keep shedding a bad light on the industry because their focus is on making money quick and doing things ‘quick and dirty’. “This is happening as we speak,” said Chotard. “Our success comes from the fact that we operate as a Swiss army knife for structured products (pre-trade, pricing, documentation and lifecycle management), and that we are very reactive to what our clients want. We have a team of developers introducing new features and functionalities every month on the back of client feedback.

The third leg of the company’s strategy is the alignment of the offering and service with clients’ interests, according to Chotard. “Our edge relies on how we deploy and offer our service,” said Chotard. “We have developed a web application that enables our clients to be on top of their clients’ investment portfolios throughout the life cycle management,” said Chotard. “We offer lifecycle management tools with product details, life cycle events and associated alerts, as well as document generation, Priips Kid, and portfolio analysis. This allows us to white label products for our clients.”