Dean Atkins, md of Structured Credit Trading Solutions, answers SCI's questions

Dean Atkins

Q: How and when did you/your firm become involved in the structured credit market?
A: Structured Credit Trading Solutions (SCTS) was officially incorporated in September 2008. It is essentially an advisory company and does exactly what it says on the tin. It had become all too clear that there is not enough understanding of the complex structured assets that are in focus at the moment, and therefore a potential market for our services.

Q: Which market constituent is your main client base? Do you focus on a broad range of asset classes or only one?
A: The potential client base stretches across the whole market from the investment banks, investors and asset managers on one side to the regulators, central banks and even law firms on the other. Our current client list reflects this breadth. We have also spent some time with academic institutions to try and make sure there's a link to the real world in terms of undergraduate/graduate students' understanding of recent events.

The idea is to be as broad as possible in terms of who we can deliver a service to. In essence structured credit is still a niche product; however, it touches a broad range of institutions, so I believe the structured credit space is big enough to focus on. We count simple ABS and MBS to the most complex CDOs and correlation trades amongst our areas of expertise.

Q: How do you differentiate yourself from your competitors?
A: The difference with SCTS is that we have been practitioners in the exact market that we are advising on. I've been in the ABS, RMBS and structured credit areas for the last 15 years.

The SCTS team has run global trading businesses across various markets and managed investment portfolios in a range of different structures. It's the specific inside knowledge of those products and the marketplace that we're using to differentiate ourselves from our competitors. However, only time will tell - we'll see who differentiates themselves successfully.

A case in point would be several of the credit opportunity funds launched last year that didn't seem to be well founded - they were looking for both the capital to get started as well as the expertise, and that's why I think so many of them didn't get off the ground. They just had the idea that it might be the right time to do it. At least with our advisory firm it's being set up by people in the know; it would be very difficult for me to set up something like SCTS without actually having relevant expertise myself.

There are precious few individuals around (in Europe) that have more than five to ten years' experience in the ABS/structured credit space. The ABS market is relatively new in Europe and didn't get critical mass until at least the early 2000s. To be senior in these markets you have had to be there since its inception.

When I tried to hire a senior ABS trader in 2005, having looked round the street in Europe, I very quickly narrowed the selection down to two people. I had no interest in hiring any of the other street traders, as they had all been in it for five minutes. Therefore the credit opportunity start-ups would have also had a hard time finding the right level of expertise for their funds.

Frankly, I think some of them will be quite glad. They would likely have been badly burned, had they started investing last year.

Q: Would you ever consider investing in the structured credit space?
A: I don't have any plans to take SCTS into the investing side right now. I have thought a lot about it, but it raises thorny issues of conflict of interest with people that we advise.

I'm sure there are ways round it, but we're focusing on advisory at the moment and building up a broad client base. If we do take a step into the investment side, it would mean excluding some types of clients and certain parts of the business, but maybe at a later stage.

Q: What major developments do you need/expect from the market in the future?
A: I'm pretty bearish on the ABS market as a whole. If the ABS market comes back, it's going to be a pretty slimmed down model of what we've seen in the past.

I don't see securitisation being a source of revenue growth for banks in the near term. I think the housing market still has a long way south to go too.

I also think there will be a very strong push to separate the major operations of a bank into the more plain vanilla retail and commercial banking side on the one hand and the 'casino' side of the bank on the other. Regulatory frameworks are pushing people along this line so that in future you can let the casino side fail if necessary. Wholesale changes to the way people are incentivised will also be a key feature of the next wave of regulation.

About Structured Credit Trading Solutions
SCTS was set up in order to provide expertise in structured asset and complex credit risk markets to the whole range of market participants and stakeholders. It has many decades of front-office experience across trading, structuring, syndication, marketing and asset management at both buy-side and sell-side institutions. Areas of specific expertise include all types of ABS and CDOs, structured credit, correlation/tranche trading, property derivatives, real estate finance and liquidity risk.

SCTS specialises in advisory projects for organisations with exposure to structured products, securitised assets or credit derivative investments, along with more general issues within the fields of asset management and trading. A particular focus is one-on-one advice for senior executives who are removed from the daily management of investment portfolios or trading books, but with whom responsibility for their performance ultimately remains.

AC