Lago Kapital
Nordic growth and challenger positioning
26 May 2026
Lago Kapital CEO Jarkko Järvitalo sits down with Hansa Tote to discuss the firm’s expansion across Scandinavia, built on a foundation of securities lending, with integrated offerings spanning market making, incentive programmes, and complex valuation services
Image: Jarkko Järvitalo
Lago Kapital was created in 2012. 14 years later, how has the business evolved and what notable developments have you identified?
We started our business as a securities lending broker. It soon became clear that in order to increase volumes we would need to be able to book single stock futures in Eurex, which would require our own trading licence from the Financial Services Authority (FSA). The new licence was granted in 2017, and opened multiple doors to allow us to set up new trading services such as liquidity providing, greenshoe in IPOs, and stock buyback services to Nordic listed companies.
Around 2019, we started offering an execution service for unlisted options, meaning Lago buys unlisted options from an incentive programme participant and hedges its position by selling an equivalent amount of shares to the market. This is an excellent example where our wide stock borrowing network is vital due to the hedging requiring a stock loan.
Most recently, we added the administration of incentive programmes to our service, which includes option programmes, performance share plan (PSP) programmes, and employee share-saving programmes.
Having begun as a stock loan broker, today we are able to offer almost everything that a listed company needs to make their stock attractive and incentivise their employees.
Many markets have been dominated by a single provider in this space. How does Lago Kapital differentiate itself and what can it offer clients?
Our aim is to be as open and transparent as possible — for example, our liquidity providing service — we believe we are still the only service provider that sends out a monthly performance report to show how we performed. Stock trading is anonymous, meaning the client is unable to follow how the liquidity provider is delivering the service. Our stock lending network services allow us to create liquidity in a stock market rally day due to the fact we can have a short position.
The incentive administration market has previously been dominated by a single operator in Finland.
We are a challenger — and given that we have invested a lot in automation — we can show attractive prices compared to the traditional monopolistic pricing. In addition, as we have the FSA licence and stock exchange memberships, Lago can easily include add-on services to incentive administration through our market access.
How does your stock loan business underpin your services, from option execution to liquidity provision and incentive programme services?
We use securities lending in every service we offer. For flexibility in liquidity providing, we can short the share without moving the volatility of the share, for hedging in option execution, in certain arbitrage trading strategies.
Can you outline the firm’s incentive plan administration? What services do you provide clients and how are they executed?
We provide a pure administration service including IFRS 2 compliant valuation and record keeping, participant portal, subscription of options, payout of shares, and share buybacks — everything except design of the plans and asset management after the plan. We do, however, have co-operation partners that offer those elements.
Valuation seems to be an area you are looking to grow further. What is the opportunity there?
IFRS valuation work has become more demanding as incentive structures have grown more complex as auditors and audit committees expect more rigorous fair value measurements. Many Nordic companies either rely on a small number of established providers or handle the work in-house with limited specialist resources. We see room for an independent and technically capable alternative.
It is also a natural extension of what we already do. Our team produces IFRS 2 valuations as part of the incentive administration service and has the quantitative skills to take on more complex mandates, such as performance share plans with TSR or peer-group conditions modelled in Monte Carlo, and convertible bonds under IFRS 9 and 13. Together with our FSA licence, exchange memberships, and existing client base, valuation is a logical growth area for us — both as a standalone service and combined with the administration work we already provide.
Given the push towards a more digital world, with automation and technologies like DLT, blockchain, and tokenisation, how are you incorporating these within your services?
Technology has been central to what we do for a long time. Market making and liquidity provision require high-capability algorithms running in real time, so a strong technical foundation has been a requirement from the start rather than something we added later. In many ways we have seen the rest of the market catch up to where we already were.
Regarding newer technologies, we have been incorporating advanced deep learning into our trading algorithms and have taken part in external projects supporting that development. We follow developments in areas like distributed ledger technology (DLT), blockchain, and tokenisation closely, and we are well positioned to adopt them where they bring real benefit to our clients.
Lago Kapital’s focus has expanded from securities lending into incentive administration and valuation. That is a meaningful shift in skill set. How have you built up the expertise needed for this new direction?
It is a different skill set, but not entirely new for us. Securities lending is a trading and counterparty business, while incentive administration involves plan structures, participant communication, accounting requirements, and valuation work. Finance and quantitative analysis have always been part of what we do, therefore adding valuation capability builds on existing strengths rather than starting from zero.
We have preferred to hire and train people in-house rather than acquire the capability externally. Today we have a team of administrators handling the day-to-day operation of option plans, PSPs and share-saving programmes, and a separate valuation team of specialists who handle IFRS 2 valuations for the programmes we administer. We have invested in their training on both the accounting standards and the quantitative methods. By building this in-house, we can deliver the full service without outsourcing the technical parts.
Looking to the future, what trajectory do you anticipate the firm and its services will take over the next three to five years?
We are offering liquidity providing services in Finland, Sweden, and Denmark today. A natural step forward is to start offering incentive management in other Nordics — especially in Sweden. Our target is that in five years our services cover all Scandinavian countries.
