“Looking ahead and to the “Looking ahead and to the sides, I see that we have the sides, I see that we have the right ideals and the right people right ideals and the right people here at SPX to face and here at SPX to face and persevere in this challenging persevere in this challenging future that awaits us.” future that awaits us.”
Luiz Caloba Head of Treasury & Execution
Head of Treasury & Execution
It is a pleasure to have the chance to write this Letter from the Partner, to tell you a little about myself, my career and what we do here at the Treasury and Execution desk at SPX
Just like many partners, I started my career at BBM (the Brazilian Commodities Exchange), but unlike most of them, my path to SPX was much less straightforward, but neither rich nor fun
A little about myself
Ever since I was very young, I have always
had a keen interest in knowledge. I used to spend a lot of time reading and had a deep admiration for my father, a professor and researcher at COPPE (the Alberto Luiz Coimbra Institute for Graduate Studies and Engineering Research). This admiration extended to other professors, some here at SPX.
When I went to university, I was thinking of following the path of science and ended up choosing Naval Engineering because I was very curious about differential equations. In the first few years, I had the chance to work
in research with some professors, and that, was when I realised that this was not the path that I wanted to follow. I even tried working on ships, but neither did that make sense to me either and I ended up deciding to do a Master's degree in finance at COPPEAD (the Graduate School of Business at the Federal University of Rio de Janeiro). That led me to BBM.
At BBM I started, like most people in the Back Office. There, I did a job called harmonisation This consisted of comparing actual results and accounting and to this day, it is one of the most complicated jobs I have ever worked on What is more, at a time when much was done manually. Shortly afterwards, I moved to the derivatives modelling area, where I had my first contact with the Board. There, I was responsible for creating and maintaining the stock market, foreign exchange and interest options systems, as well as an international securities system During that time, I had the pleasure of having Beny as my director (just before he went to the Central Bank) I learnt a lot from him.
Two years later, I moved to the options desk. There, I was then given the cash desk and treasury for clients. At that time, I had the pleasure of working directly with Bruno Pandolfi, Daniel Schneider, Leo Linhares and Rogerio Xavier as a director It was an extremely interesting time when I realised how different these people were (and are), above all because of their ability to adapt to changing rules and, in this environment, manage a company by investing safely and
accurately, adding value and making money in an extraordinary and consistent way
In 2007, I made the difficult decision to leave BBM along with this group of exceptional people, joining Goldman Sachs with the tough task of helping to establish the bank's franchise in Brazil. In the beginning, I did a bit of everything, from setting up the structures (funds and vehicles), looking after the cash flow and adjusting pricing models for our environment After five years, I returned to the bank to look after structured products for clients, selling local products to foreigners and offshore products to locals I was also responsible for the local inflation book for the bank
In 2017, after 10 years using short-haul flights (my family never wanted to leave Rio), I was invited back to BBM (now BOCOM BBM) as treasurer, to help with the bank's new stage It was an interesting period, in which I learnt about credit and recreated the part of derivatives for clients that had been discontinued in 2008. Today, this part is responsible for 20 per cent of the bank's earnings
In 2020, I moved to RAIZEN as head of financial risks (again in São Paulo, again using short-haul flights). This move was very special, as it happened in the middle of the pandemic. I was often one of the only people on the trading floor and only got to know part of the team almost a year after joining. It was a time when I got to know the commodities side, as well as the energy
sector, and had the pleasure of seeing the real economy more closely
Even though I had pursued a very exciting career, I never stopped looking back with nostalgia and admiration at the people who made up SPX. I also saw that the culture based on excellence, meritocracy and agility, which I had the chance to experience during my first stint at BBM, was not only still alive, but had also improved at SPX. I had been sure, for a long time, that this was the right place to be.
The big question was how and where to add value to a group of people who were already excellent at everything they did After studying the organisation of Hedge Funds outside of Brazil, I realised that there was one area where my expertise would be very useful: cash and treasury optimisation. This represents an extremely complex problem that is largely neglected by the vast majority of local funds. At first, I spoke to Bruno Mafra, Bernardo Queiroz and Leo Cabral, and later to Bruno Pandolfi, who made me an offer to join SPX in December 2022.
My first focus at SPX was to take charge of the Treasury But why that? What was the point of having a senior person looking after it? In Brazil, cash management is much less complex. Basically, it consists of leveraging or not, positions with underwriters, taking up of shares, buying securities as collateral on B3 and passing on the cash that is left over, respecting a series of limits imposed
by regulation. Basically, we deal with one central counterparty, one single settlement currency and a highly regulated environment. There is, of course, room to add value, but it is much smaller It basically consists of operating on a securities basis and bringing in, or out, money, depending on the remuneration of the exchange coupon.
Outside Brazil, however, this environment becomes much more complex. On the market, there are several settlement currencies with different yields Various types of margin calls - exchange positions, over-the-counter positions registered and guaranteed on exchanges and over-thecounter positions only. All these types of operations can be carried out with a myriad of business parties, each with a different margin call and remuneration rule. This not to mention different products with the same risk, such as equities and equity swaps.
Our job in the treasury is to look at all this and minimise our margin call, as well as the cost of that margin Although it may seem exaggerated, especially when compared to our local competition (which does not pay as much attention to this), overseas funds have entire teams monitoring just this. We see ourselves more and more as global players and we can't help but follow the international trend and develop in this direction
To this end, our main focus is on technology. Today, in addition to myself, we have one other person and an intern dedicating a significant part of their time to
implementing the metrics in an automated way, as well as making progress on the project in which the allocations of our operations will automatically follow the most suitable counterparty for SPX
In June of last year, Bruno called me for a chat. We had just approved an extra person to help me in Treasury and he asked me to hold off on hiring them. A few weeks later, I was presented with the challenge of, in addition to Treasury, looking after and developing the execution desk. At the time, I was only looking after the operations of Marcelo Castro's team, Garret and Hans, as well as the Middle (billeting) part of commodities and the international stock exchange.
The concept of the execution desk is widespread outside Brazil and consists of separating the functions of the PM, leaving him with the sole concern of deciding the strategy of the book, and the trader, who must have a vision of market positioning, flow and instruments. This concept allows for specialisation of functions, as well as smaller teams more focused on the management area. In addition, another clear advantage of this organisation is the speed of “onboarding” new PMs, as well as the ease with which trading compliance can be controlled from a single area
In Brazil, as most funds derive from former treasuries, it is quite common for the PM and trader activities to be combined and SPX followed this concept until Marcelo
Castro joined, who brought this concept to SPX and was first responsible for the desk, then passed the baton to me so as to be solely devoted to management.
Today, with the advent of multi-strategies, we have a total of eight desks and 12 managers, who we serve directly by carrying out various operations every day. The desk has expanded and today has four traders in Brazil (more focused on treasury and technology) and one trader in Singapore operating 24 hours a day A significant part of the fund's risk passes through our desk and every day we try to add more value to SPX Here I have to say a special thank you to Leo Cabral, who has helped me get the area up and running and, above all, has trusted us to deliver the product he needs as a client.
In addition, we are also responsible for allocating and billeting the Commodities and Equities Brazil desks (only Foreign Exchange and Interest remain internalised). In this sense, the proximity and joint work with the Risk and Back areas has been fundamental. We feel increasingly close to concepts such as online risk and automated matching tools, which will be important for SPX in the future. Already today, more than 50 per cent of this front-office work at SPX is done by us. Here again, only systematisation and automation can guarantee our consistent progress.
In March 2024, I was invited to become a partner at SPX. I believe that here we have
ian environment where there are no barriers to how much you can contribute The structure is horizontal and everyone is willing to listen and can (and should) speak up In this way, I saw this invitation not only as recognition of my effort and dedication, but above all, as a sign that there is still a lot to be done and to contribute to the team. Everyone who knows me realises that I am passionate about what I do I love challenges, of having something new and adding value.
Today I look back and feel happy for everything I have been through and, looking ahead and to the sides, I see that we have the right ideals and the right people here at SPX to face and persevere in this challenging future that awaits us.
by HR
We welcomed students from the PUC League to our Rio de Janeiro office, giving them an in-depth insight into SPX and the Equities and Macro areas They also had the opportunity to ask questions about the market and careers. The visit was led by João Torres, Rafael Magri, Eduardo Zilberman and the HR team.
by HR
In August, we held another edition of the Meeting with Partners at Joaquina Bar & Restaurant in Rio de Janeiro. The event was hosted by Marcelo Castro and attended by 15 employees. It was an excellent opportunity for everyone to share experiences and enjoy a moment of integration and relaxation.
by HR
In August, we held the SPX Circuit in São Paulo The event took place in Ibirapuera
by Marketing
On 29, 30 and 31 August, in São Paulo, we took part in Expert XP 2024, one of the biggest events in the financial sector It was an incredible opportunity to connect with leaders and professionals in the field, share knowledge and explore new possibilities.
Our team was present, engaged and committed to absorbing as many insights as
possible, as well as actively participating in the discussions and panels presented. During the event, we had the chance to follow trends, listen to renowned experts and strengthen our position in the market
Our participation was essential for consolidating relationships and identifying new opportunities for growth.
by IR
1.
ComBio, a company in SPX's Private Equity portfolio, has once again been awarded the Gold Seal in the Brazilian GHG Protocol Programme for its 2023 carbon inventory, carried out by FGVces. The Gold Seal is the highest accolade for companies that present their greenhouse gas emissions in a complete and audited manner. This year, for the first time, ComBio accounted for emissions from its entire raw material chain, measuring the impact of 100 per cent of the biomass used to generate steam.
2.
Leonardo Linhares, Member of the Board of Directors and Head of Equities at SPX Capital, took part in the panel ‘Stock exchange and volatility: how to make good choices?’ at Expert XP 2024. The panel was recorded and you can watch it in full by accessing the logged-in area of the Expert website by clicking here.
FII SPXS11 distributed dividends of BRL 0.099 / share for July/24 (Dividend Yield: 1 10% p m or 13 60% p a ) - DY calculated using the closing price on 31/07). The highlights, according to the Management Report, were the purchase of CRI Liberato with an acquisition rate of IPCA + 10.0% p.a. and the purchase of CRI Franco Ribeiro with an acquisition rate of IPCA + 11.50%, as well as the sale of FII LIFE11 with a return equivalent to 285% of the CDI in the period In August 2024, SPXS11 completed two years since its IPO.
Click here to access the Report.
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