Ardent Financial is launching as a global securities dealer specialising in the high-yield credit space, making it the latest independent trading firm to take on investment banks in areas they have traditionally dominated.
It will be regulated by the FCA and headquartered in London focusing on the US dollar, euro and sterling markets.
The business is independent and capitalised - it will start with seven senior professionals, including two dedicated traders.
It is led by chief executive Peter Chung, a 20-year veteran of the credit industry, who was last a senior trader in SC Lowy’s European, US and EM event-driven/special situations business. Before that, he was head of European distressed, HY and loan trading at Nomura. He started off as a portfolio manager in the US.
"We operate under most of the same regulations that the larger investment banks do. However, without large legacy assets, NPLs, internal conflicts and a smaller footprint, we are in a better position to operate our business more efficiently and diligently," said Chung.
"We've carved out a niche for ourselves."
There are few examples where permanent equity has been raised for a sales and trading operation. Most agency brokers, for instance operate on a non-capitalised basis and are founded on upon longstanding relationships.
Ardent intends to provide investors with two-way markets in event-driven credits and has already onboarded a number of European and US institutional clients. It also believes that, as an independent firm, it will not have to manage the conflicts that most banks with large origination businesses have to cope with.
Global banks have been hard hit by post-crisis regulations such as Dodd-Frank that have hampered their ability to conduct traditional bond market-making. Investment banks have also reduced the number of experienced sales and trading professionals over the years due to cost pressures.
Investors have long complained about the paucity of secondary market liquidity, where dealers cannot take substantial positions and are only able to quote indicative prices in small size. Although bid-ask spreads have recovered significantly since the Covid-19 crisis convulsed markets in March, investors are still reeling from what happened during that extremely volatile period.
"The firm is not like a traditional broker that doesn't have capital and is trading on a matched principal basis. We've secured institutional equity and so will operate as a traditional sales and trading desk but within an independent company. We will be making two-way markets and provide liquidity in event driven situations across a range of performing, stressed and distressed credits," said Chung.
"Our focus is on stressed and distressed credits that have the potential to be mispriced. We conduct comprehensive fundamental and legal analyses on the situations we are focused on."
Chung argues that because Ardent is a tight-knit team focused on one primary business line and without internal conflicts, it will be able to better navigate the markets and support its clients.
The brokerage's chief operating officer is Aidan Brady, who was previously COO of Deutsche Bank UK and chief executive at DB UK Bank Plc.
Timothy Alexander, is Ardent's head of strategy. He was last partner and European head of Sound Point Capital Management. Prior to that, he worked in UBS’s European loans and distressed trading business.