When most people envision Business Continuity Planning (BCP) and testing, they conjure up images of conference rooms, hardcopy documents, projectors and key personnel. But the real world is a different reality.
In recent memory, there have been many situations that have disrupted businesses - be it by natural disaster or as a result of human interference. In either event, people need to be able to reestablish essential business functions, communicate, and make decisions as quickly and easily as possible.
Although many organizations do an annual BCP review, the big question is whether they truly test the process, ease of accessibility, and the time it takes an organization/leadership group to go from unsure about the situation to confidently executing a thoughtful game plan.
What can make a considerable difference in terms of functionality and familiarity with the plans and recovery procedures is to practice -- not only verbally in the conference room setting, but also by taking time to troubleshoot and brainstorm to determine what works and what may need a second look. There is a lot that can be learned from being unplugged and “kicked” out of the conference room and asked to assume a role outside of the comfort zone. This can be done simply by taking away some of the accepted norms during a test. The following scenario illustrates issues that arise when the accepted norms are chipped away.
We spend a lot of time educating our clients about security best practices and encouraging them to implement comprehensive security policies and procedures to mitigate risk and protect both the firm and its employees. And for good reason. Just today, New York Attorney General Eric Schneiderman released a report stating data breaches across the state more than tripled from 2006 to 2013 and cost businesses more than $1.37 billion last year alone.
While companywide policies should reflect long-range expectations and corporate best practices, they should also include tactical recommendations that employees can follow to ensure they are complying with the company’s overall risk strategy. In addition to providing employees with security best practices they should follow, don’t forget to also include a list of actions they should not. Here are just a few pieces of advice we regularly offer our investment firm clients:
Lock your computer and mobile phone(s) when you leave your desk and/or office
Use care when entering passwords in front of others
Create and maintain strong passwords and change them every 60-90 days (We recommend a combination of lowercase & uppercase letters and special characters)
Following is the second part in a two-part guest post from Branden Jones, Global Head of Marketing at Liquid Holdings Group, Inc. based in New York, NY. To read Part One, click here.
In this age of data management—this new state of cross-office functionality—operational models must be able to house, curate, and level-off information sets as they happen. Funds must not only actively manage a growing universe of market data but also tackle performance reporting, risk projections, disaster planning, and partitioned client data.
To successfully, and simultaneously, manage these activities, funds must have a data operational model that supports automation, where it makes sense:
- Continuous processing, as an underlying system
- Consistent normalization, across the board
- Historical, since inception view
- Defensive measures, to protect the operation
Real-time, continuous actions are the new normal in today’s hedge fund reality. Funds are expected to understand, identify, and take advantage of opportunities as they occur. However, from a data standpoint “real-time” is only a point on a larger continuum of activity that occurs when a participant observes or captures a single event in time. Continuous processing is the underlying current that accepts and captures, or rejects data inflows and outflows. As pressures increase from both investors and regulators, managers should rely on continuous, automated services, processes, and technology to support their business, not only as a viewable segment, but constantly, throughout the lifespan of the fund.
Following is the first part in a two-part guest post from Branden Jones, Global Head of Marketing at Liquid Holdings Group, Inc. based in New York, NY.
This is the year for big data. Across industries, firms have unprecedented amounts of both public and private information sets – from user profiles and consumer habits to business outputs and proprietary algorithms. But access to data, or information at large, does not guarantee a valuable yield. Jonathan Shaw, managing editor of Harvard Magazine notes, “The [data] revolution lies in improved statistical and computational methods, not in the exponential growth of storage or even computational capacity.” Data is ubiquitous but not intrinsically valuable – it needs to be smartly processed, not just farmed.
For hedge funds, data processing is the quiet, invisible process that moves through the trade lifecycle—accessed from external entities like exchanges and brokers, modified and adjusted in execution, and at times, frozen in snapshots for an increasingly complex group of investors and regulators. More operational credibility and regulatory compliance is required than ever before, with increased scrutiny of the secret buy-side manna that goes along with it.
Smarter data management can be expensive and time-consuming as funds seek to keep up with regulatory, compliance, and transparency requirements while navigating through a sea of market opportunities. Good fund management starts and ends with precise, accurate data management. Truly taking advantage of data, and smarter computational methods, requires not only shedding the skin of outdated models, but categorically understanding a whole new data ecosystem, with new methods of processing, through selective automation and augmented observation. Once that new data ecosystem has been embraced, fund managers can spend their time mastering alpha generation and capital building initiatives.
We continue to speak with clients and prospects on a regular basis on the topic of cybersecurity, and with the expectation that the SEC will start security exams sometime around September, it’s evident that firms are working diligently to answer the questionnaire and shore up internal practices.
To continue fostering education around this topic, we hosted two events last week dedicated to cybersecurity for hedge funds and investment firms. For your convenience, you can read a brief recap of some of the key topics discussed or scroll down to watch our full webinar replay.
Cybersecurity a Hot Topic on State & Federal Level
By now, we all know the SEC has taken steps to assure that hedge funds and investment advisers put security mechanisms and practices in place to protect against cyber threats. SEC Commissioner Luis Aguilar said there is “substantial risk that a cyber-attack could cause significant and wide-ranging market disruptions and investor harm.” Even beyond the federal level, some states are chiming in on the cybersecurity front. Earlier this month, Massachusetts and Illinois acknowledged that they were polling investment advisers about their security practices, and that based on responses, state regulations could be impacted.
Categorized under: Launching A Hedge Fund Security Hedge Fund Due Diligence Hedge Fund Operations Hedge Fund Regulation Infrastructure Communications Outsourcing Business Continuity Planning Trends We're Seeing Videos And Infographics
In Part 1 of our Transformation of IT seminar recap, we shared what our expert panel discussed relative to evaluating outsourced solutions and leveraging technology solutions. Our panel included Vinod Paul, Managing Director, and Steve Schoener, Vice President, at Eze Castle Integration, John Budzyna, Managing Director, and Dave Messier, Director, at KPMG, Timothy Ng, Managing Principal at Clearbrook Global Services, Jon Anderson, Global Head of OTC Derivatives at SS&C GlobeOp and Sheldon Rubin, COO/CFO/CCO at S Squared Technology LLC.
Read on to see what our speakers had to say about the considerations for outsourcing, typical transformation challenges and more. You can also read Part 1 of the event recap or listen to the complete audio replay.
Q: Whether it's technology, compliance or another area of the business, firms ultimately need to decide if they are going to manage these areas internally or outsource to an expert vendor. How does a hedge fund determine what is the right solution for them and whether to outsource or maintain their own systems and operations?
When considering internal operations vs. outsourcing, a firm must determine which option gives it the most control over the given process. The firm is not only considering outsourcing technology but also outsourcing control.
The annual gathering of Apple’s developers took place earlier this week in San Francisco, and top Apple execs Tim Cook, Phil Schiller and Craig Federighi took center stage to reveal what new products and features users can expect to see from Apple in the near future.
Before we get into the specific announcements from the Worldwide Developers Conference (WWDC), let’s talk numbers and take a look at what Apple has been up to as well as their growth as a company:
9 million registered Apple developers (47 percent increase from 2013)
800 million iOS-powered devices sold to date
80 million Macs have been installed to date
130 million new customers in the past year
1.2 million apps currently available in the App store
75 billion apps downloaded to date
12% growth in the Mac market share (whereas PC has declined)
Regulatory oversight, competition for assets and investor due diligence concerns have left investment management firms with more pressure than ever to succeed. And technology innovations like the cloud have turned the traditional hedge fund operations model on its head. The questions remain: how do fund managers evolve in 2014 and meet the increasing demands of the financial services industry? And how do firms compete with the incoming crop of new launches that continue to emerge and vie for investor allocations?
The following presentation takes a closer look at these key transformations within the hedge fund industry and examines the shift firms are making from traditional, on-premise IT infrastructures to cloud-based platforms. It also highlights managed disaster recovery services and offers best practices for security in the cloud.
Take a look, and if you can, join us in New York on Tuesday, May 6 as a panel of experts discusses these topics and more at our Transformation seminar.
First and foremost, Happy New Year everyone!
2014 has officially begun, and as with every New Year, it is important to reflect on the previous year and set goals for the future. Many of the resolutions that we made last year are still prevalent this year because they are foundational for a hedge fund’s success. This year we are offering a few more critical recommendations to ensure that your company and IT operations run efficiently and effectively.
The results from our Global Hedge Fund Technology and Operations Benchmark Study are in and here is a snapshot of the 2013 findings. You can find the complete report here. We surveyed 538 buy-side firms across the United States, UK and Asia in order to discover their front, middle, and back office technology and application preferences.
All survey respondents fell into the following categories within the financial industry: hedge fund (60%), asset/investment manager (13%), private equity firm (8%), fund of hedge fund (5%), non-financial firm (5%), advisory firm (1%), broker dealer (1%), venture capital firm (1%), quant fund (1%), or ‘other’ (3%).
The firms resided in three different asset classes: 30 percent reported their AUM as $100 million and under; 32 percent fell between $101 and $500 million; and 38 percent reported over $500 million in assets under management.
In regards to investment strategy, long/short equity continues to dominate as the most favorable with 45 percent of respondents reporting this to be their primary investment strategy. Other preferred strategies include fixed income (8%), credit (7%), global macro (6%), emerging markets (6%), distressed debt (5%), and event driven (4%). The top prime brokers employed by firms in 2013 are Goldman Sachs, Morgan Stanley, Credit Suisse, JP Morgan and UBS (same as last year).