Letter from the CEO – Summer 2020

Letter from the Cassini CEO Liam Huxley- Summer 2020

Written by Liam Huxley, Founder and CEO, Cassini Systems

In a world of change, the Three ‘T’s are the key to a successful 2020.

A year of dramatic change and unpredictability in many arenas. As we pass the midpoint of this year, it is worth taking a small breather to reflect on the happenings of the last 6 months, and most importantly, if there are lessons we can learn for the future.

While, as has been pointed out, it is the first time in the history of humankind that every country across the planet has faced the same challenge at the same time, and dealt with it in almost exactly the same ways, we have all seen changes in our own lives and organization, and industries that are worthy of reflection and comment.

In our industry and business, we have been faced by the same challenges as everywhere else:

  • Adapting to new social paradigms such as remote working, social distancing, restructuring personal lives and childcare etc.
  • Huge economic turmoil and volatile markets
  • Pervading uncertainty and lack of clarity for the short- and medium-term future

Despite all the above, this has been a time of progress and expansion for Cassini, which feels like a huge privilege in the current climate. Since lock down started, Cassini have:

All these feats in last six months, while also re configuring our work processes to ensure as much collaboration and ‘normality’ as possible as 100% of our staff continue to work from home.

This is where the ‘T’s come in. When I was reflecting on how we have managed to achieve so much in unusual conditions with no room to slow down or delay projects in any form, I concluded it came down to three things that the Cassini team has in spades:

Trust, Transparency, Teamwork

These attributes have created a resilient and strong team able to adapt rapidly to anything.

Trust means knowing and trusting each other, and your clients. This is a key part of our culture and it has shown its true value during the lock down. Knowing that whoever you talk to across the company is there to work with you, and will help you any way they can becomes immensely powerful when everybody is on the other end of a Teams chat or Zoom call

Transparency. As a close-knit firm there is a lot of collaboration and openness in normal times and during lock down we have looked to support and strengthen that. Weekly all-company calls to chat and shoot the breeze, daily calls for each team and many cross-team calls/meetings ensure that information and knowledge transparency Is top down, bottom up and sideways.

Teamwork. Trust and Transparency flows into a culture of teamwork that becomes part of the fabric that is not manufactured or forced in any way. Even while all working from home in three different countries, at Cassini we are all working together, supporting each other, and helping out where we can. And that means we make sure our clients succeed, while creating a fulfilling professional environment for everyone at Cassini.

Being part of this organization over the last few months and seeing how the three ‘T’s have come into their own has just driven home what an amazing group of people we have in Cassini and how key it is to know,  and trust the people you work with!

Looking outward across our industry, the pattern we’ve observed in our clients and partners is, as you will all recognize:

  • Initial operational shock of COVID-19 and having to reconfigure / relocate teams as lock down kicked in
  • A period of huge market turbulence as the economic impact of closing down large tranches of the global economy hit home
  • And now a sense of stabilization and pragmatic adaptation as the risks and impacts become better understood

What has this meant for the buy side community that we work with?

Obviously, the market turbulence presented many challenges for front and back office. Specifically, we saw many firms struggling with margin calls and lack of eligible collateral. We were able to help clients navigate these issues by providing transparency reporting and optimizations for their portfolio.This helped firms retain collateral liquidity and meet the large margin swings that were a feature of the first stage of the lock down.

As volatility has reduced a little, we have seen firms who previously had collateral analytics now start to put focus on how to mitigate their exposure to these types of volatile markets in the future.

Across the industry, the realignment of the Uncleared Margin Rules (UMR) phases to 2021 and 2022 has been a help for a lot of firms, allowing them a window to put in place a strong strategic solution

Overall we are seeing a slight lessening in anxiety about the future, not to say firms are becoming complacent, but that the lay of the land and the potential risks are now becoming clearer, so firms can start to plan and mitigate risk.

There are obviously huge economic headwinds to come, and big concerns about the surge in unemployment likely to hit after support schemes roll off. There are also warnings about the level of CLO exposure of major banks, securing the corporate debt of below grade companies, so no-one can be complacent. If these or other impacts do create another wave of market volatility, then firms across the buy side will need to be prepared and have the tools ready to control their collateral risk and ensure operational liquidity.

What comes next is anyone’s guess, but I do know that within Cassini we will continue to live the three ‘T’s and will embrace and adapt to change as we have always done.