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Derwent Capital Markets Closes Twitter Fund

Hedge fund moves into trading platform space with social media component.

Institutional Investor’s Trading & Technology web channel recently featured traders who use huge advances in the science of artificial intelligence to pinpoint and profit from the mood of the masses.

The article appeared just weeks after the shuttering of the world’s first Twitter-based hedge fund, the Derwent Absolute Return Fund. The CEO and founder of Derwent Capital Markets, Paul Hawtin, told Institutional Investor that his firm had made a decision to move out of the hedge fund space because sustaining its fund didn’t seem viable.

“Our initial fund investors formed a consortium with us to maximize the commercial potential of our technology, which we believe is within the retail sector. We couldn’t have launched the fund into a worse capital-raising environment. If you remember back to August last year, the FTSE lost 1,000 points in ten days when the U.S. lost its AAA rating and had to raise its debt ceiling. Investors turned completely risk-averse, so we took the decision to move out of the hedge fund industry and open our technology up to the retail market through an online trading platform with a combined-sentiment analysis tool,” wrote Hawtin in an e-mail to Institutional Investor.

According to Hawtin, Derwent’s online trading platform will be built on IG Group’s application programming interface, but the front-end and sentiment analysis will be entirely Derwent’s own. “It will enable retail traders and investors to monitor global, real-time sentiment on their favorite stocks, currencies and commodities. This will be the first time ever a platform will offer such technology,” said Hawtin.

Derwent clients will be able to set up alerts so they will receive a text message or e-mail when a company they are following experiences a sudden change in sentiment, he said, “which is an indication of an impending price move.”

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