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Guillaume Le Fur, Compass Financial Technologies
Guillaume Le Fur, Compass Financial Technologies

Indices are at the heart of product innovation

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Compass Financial Technologies | Best Cryptocurrency Index Provider

“Compass Financial Technologies’ roots are in the commodities industry,” explains Guillaume Le Fur, founding partner. The firm launched six years ago, spinning off from USD10 billion commodity asset manager Diapason Commodities.

“At the time of the Diapason launch in 2002, we strove to promote the commodities asset class. Commodities were the next big thing back then, just like digital assets are today.”

In 2016, when the opportunity came to take over the index and quantitative research department of Diapason, Compass Financial Technologies was founded. One of the firm’s primary goals was to act as a calculation agent (mainly for investment banks), which they now do for over 1500 indices.

“We have no IP — our clients design their own indices. They are seeking an independent party to act as a calculation agent, either because of the benchmark regulations and/or the complexity of their indices,” Le Fur explains. “We may be a small player, but we are focused on all non-equity asset classes; so commodities, fixed income, corporate bonds, digital assets are more. And, we are particularly focused on complex indices. We love a mathematics challenge — the more formulae the better.”

He describes how their background in asset management and trading has allowed Compass to help clients design their own index rules. “We represent a strong added value for them, as we combine 20+ years of experience in index trading with state-of-the-art infrastructure. Our ultra-modern, cloud-native data computation platform offers ultimate scalability and flexibility.”

Now, Compass also designs its own indices and licenses them to third parties, or to other index providers in some cases. Though the firm is mainly focused on alternative asset classes like commodities, they have developed notable products in areas like real estate, and more recently digital assets.

“We started working with digital assets six years ago. So, we were eager to explore cryptocurrency as a new asset class not long after it first gained public interest. However, like we saw with commodities, there is still some hesitation in terms of market adoption. Demand currently comes primarily from the retail sector. I predict that will change soon.”

He notes that while traditional markets are currently experiencing turbulence, bitcoin has gone up more than 40 per cent in just two weeks. “Some investors see digital assets as a way to avoid risks associated with the financial industry, and to achieve diversification and a hedge,” he says.

“We expect to see more regulation in the future in regard to digital assets, which seems like a paradox because of the decentralised nature of cryptocurrencies. Nevertheless, it’s necessary. The SEC and European regulators are currently working on this and institutional investors are beginning to take this asset class seriously.”

Still, he argues the need for more innovation. Compass plans to lead developments in the industry by creating indices that offer smarter exposure to digital assets.

The firm just launched a benchmark on Ethereum staking yield that reflects the Ethereum blockchain’s upcoming upgrade. They expect product issuers to utilise the index in order to provide a total return product for Ethereum.

“We understand that indices are at the heart of product innovation,” Le Fur says. “We aim to legitimise and advance the digital assets industry through our indices.” 

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