Napoleon Index approved as benchmark administrator and calculation agent in Europe with set up providing blockchained audit track
Paris-based Napoleon Group has announced that its index division, Napoleon Index, has been registered as a benchmark agent by the French financial regulator,the Autorité des marchés financiers (AMF).
Napoleon Index is the index administrator and calculation agent division of Napoleon Group for proprietary benchmarks using machine-learning algorithms. Main indices will be disseminated through regular data vendors, on napoleonindex.com and on the public Ethereum blockchain for audit trail. The Napoleon Index platform offers an optional, first-of-its-kind audit tracking system based on blockchain technology for enhanced transparency and security.
“Our index offering is a very important part of our overall product proposition,” Stephane Ifrah (pictured), chief executive of Napoleon Group, told SRP. “We think it provides a complement to what we offer via Napoleon Capital and Napoleon AM. Our plan is to develop indices that we can deploy though our brokerage and asset management outlets. Being regulated as a traditional index provider also gives us the opportunity to operate our index business beyond France on a standalone basis and target manufacturers of structured products.”
Napoleon Index produces tailormade index solutions for investment banks, asset managers, broker-dealers and open source trading strategists. Following the index certification the French firm is seeking to launch its first fund in Q2 this year, which will be structured as an index fund using one of Napoleon Index’s index strategies.
“The strategy will be replicated using a swap between the fund and a European tier one investment bank,” said Ifrah, adding that Napoleon has already have a dedicated mandate product that was launched in February 2018. “This is a CPPI over a mix of three existing strategies that is managed by BNP Paribas. Napoleon Capital acts as a financial advisor for the strategy.
"We intend to offer similar products to insurance companies for which the cost of capital is an important component in their decision-making process; and to family offices that need to issue a guarantee in the case of business sale, but would like to make some return on the collateral required by the buyer.”
“Napoleon Index is the first benchmark calculator and administrator to offer audit tracking using blockchain technology to asset managers and investment banks across Europe. This is another way in which blockchain can be applied to bring a significant benefit in efficiency, security and transparency to fund providers and their clients.”
Napoleon Index’s arrival is significant for how it drives the asset management industry forward by expanding the range of services available to traders and investors. Napoleon Index’s quantitative trading management, microservices platform and blockchain-based services sidesteps the structural roadblocks to achieve greater efficiency and transparency inherent in legacy systems, according to Ifrah.
“As a pure fintech company, recently launched, we bring the latest technology to the industry, including blockchain as an audit track,” he said. “After initial discussions with large established customers, it appears that the blockchain feature is of significant interest to them, especially regarding corporate action analysis in a timely and open manner. We also bring more flexibility in index calculation since we are in the quant business and understand very well our customers’ needs. It is easier for us as a new company to fulfill these needs than for established actors who may view it as a complex business that would require heavy investment.”
Napoleon Index was approved by the AMF under the EU Benchmarks Regulation (BMR) on February 28 2019. The BMR, which came into force in June 2016, establishes a common framework and consistent approach to benchmark calculation and administration across the EU. It aims to ensure robust and reliable benchmarks as well as minimizing conflicts of interest in benchmark-setting processes, ultimately to protect investors.
Napoleon Index is also planning to work as index calculator for proprietary indices from investment banks looking to address conflicts of interest resulting from the introduction of the BMR which will come into force in 2021.
“Napoleon Index will provide indices developed in-house and index services for external customers as a calculation agent and and index promoter,” said Ifrah. “We are already in discussions with several tier one banks about this and will soon begin tests with some of them.”