As cloud services continue to become increasingly popular among hedge funds and investment firms, there still seems to be an area of confusion that surrounds this technology. We've talked through Why Cloud Computing is Right for your Hedge Fund and Understanding Public, Private, and Hybrid Clouds. Now, let's look at three key elements to consider within the cloud: Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).
In a SaaS model, firms are offered a complete range of applications via the Internet, all of which are managed by the hedge fund cloud provider. This means firms can forego upfront investments in servers and software licenses and pay a predictable per-user, per-month fee.
PaaS is the delivery of a computing platform over the Internet. The PaaS model enables hedge funds to create Web applications quickly without incurring the cost and complexity of buying and managing the underlying software and hardware. Firms have control over the deployed applications and environment-related settings. PaaS is great for firms creating or managing their own applications or looking for testing and development environments.
Among the many technology decisions your firm will face during the launch phase is selecting the appropriate telecommunications needs to power daily operations. High-speed Internet and voice connectivity are necessary to access market data feeds, communicate with investors and facilitate trade orders and other investment decisions. To help you make an informed decision about your voice and Internet needs, we’ve provided a few suggestions below.
The Internet, of course, is an essential vehicle for collecting and distributing market data, as well as communicating with your clients, investors and partners via email. You’ll likely find four Internet access choices, depending on availability in your area. There are benefits and drawbacks to each, as described below.
Following is an excerpt from our 21-page Guide to Hedge Fund Technology Outsourcing. Skip ahead and download the full paper HERE.
As technology continues to grow as an important competitive differentiator for hedge funds and investment firms, funds are continuing to leverage technology outsourcing as part of their operational strategies.
A variety of circumstances in the industry have driven this move to outsourcing including:
The changing economic environment as a result of the financial crisis;
Increased investor focus on transparency and operational risk; and
Rising overheard costs relative to owning, maintaining and monitoring one’s own technology infrastructure.
Hedge funds and investment firms can leverage outsourcing in a variety of ways – everything from help desks to document management, virtual Chief Technology Officers and other staff to disaster recovery plans, FIX connectivity and more. But regardless of the specific elements being outsourced, funds should look for a few baseline requirements as part of an outsourcing solution:
A secure physical infrastructure;
Efficient and reliable communications;
Data protection; and
Vendor strength and stability.
On September 15, 2015, the SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert providing additional guidance on key focus areas for round two of its cybersecurity examinations. Specifically OCIE stated exams will “involve more testing to assess implementation of firm procedures and controls.” The Commission intends to focus on the following areas as a means to collect information on cybersecurity-related controls and assess the controls in place at firms:
Governance and Risk Assessment: According to the Alert, OCIE may evaluate the governance and risk assessment process for areas including, but not limited to, access control, employee training, third-party/vendor management and IT systems management. Examiners also expect to see that assessments and associated policies are specific to a firm’s business.
Access Rights and Controls: OCIE warns that the lack of basic access controls and user management policies can result in unauthorized access to systems and information. Examiners may request details on how a firm manages user rights and what supporting technologies are in place.
The following article originally appeared on HFMTechnology.
Although we are faced with change on a daily basis, especially in the hedge fund technology industry, keeping pace with ongoing tech metamorphoses does not come easy for everyone. Fear, the biggest contributor of hesitancy toward change, masks the opportunities innovation presents. Fear is what leads to IT limbo, and in an ever-evolving technology landscape, this effect can be crippling. However, with the support of expert IT service providers, the pains and fears of migrations and upgrades are alleviated.
In this article, we’ll examine the recent end-of-life (EOL), of operating system (OS) Windows Server 2003, its resultant challenges and how to overcome them.
Doing Nothing and Risking Everything
Windows Server 2003 extended support ended on July 14, 2015; however, not all users have made the transition to Windows Server 2012 R2. Why are firm’s remaining on an out-of-support OS?
The primary influencers are fear and a lack of sense of urgency to replace a still functioning OS. In the case of users still utilizing the legacy application, the risks they face largely outweigh the benefits. By doing absolutely nothing, firms are risking everything. As patches and bug fixes are no longer being provided, hackers have an unguarded entrance to access a firm’s sensitive information, passwords and banking accounts. This not only increases the firm’s odds of being hacked, but also raises the gravity of ensuing damages should an incident occur.
Additionally, if a firm’s network does crash that’s still deployed on Windows Sever 2003, the odds of finding expert support become increasingly limited with each passing year. This is predominantly due to the industry’s forward marching nature. An outdated system will only continue to fall behind in the race of technology, trouble shooting will take longer, future applications will fail to run, or crash the server altogether, and the cost to migrate increases concurrently as the pool of experts shrinks.
The bottom line is change is inevitable, and eventually 2003 will reach a point where the surrounding ecosystem won’t work with 2003 servers. Ultimately, MS will make it so the OS becomes inoperative as the company continues to evolve. So what can we do?
The world watched yesterday as Apple’s CEO Tim Cook unveiled the new iPhone 6S and iPhone 6S Plus along with a number of new products and applications. Apple also introduced the latest Apple TV featuring new capabilities for games and apps, a new iPad Pro that caters to professionals and enhancements to Siri that allow iPhones, iPads and Apple TV to be more tailored to the user’s interests. In case you missed yesterday’s announcement, here is a quick recap.
Apple announced the release of 10,000 new apps created for the Apple Watch over the last year. The company has added Facebook Messaging, iTranslate and Airstrip features to the new watch. Apple claims that Airstrip is going to revolutionize the health industry by having a health monitoring tool that allows doctors to check real-time feeds of heartrates and other measurements for their patients. Apple is also looking to give the watch a makeover by working with Hermès on new models. They have added leather bands and two new anodized aluminum colors: gold and rose gold. The devices will ship out today in 24 countries; however, customers will have to wait until September 16 to download the new Watch OS 2 software to their devices.
Back on July 8th of this year, the New York Stock Exchange (NYSE) experienced a temporary outage and proactively suspended trading. In many ways, the NYSE acted swiftly and responsibly when they noticed that there was a technical issue with its trading platform. The NYSE realized quickly that traders would not be able to reliably trade and ultimately decided to suspend trading across the market until full functionality could be restored. In total, NYSE trading was suspended for nearly four hours.
Although the overall impact of the downtime was minimal in the grand scheme, had this event impacted the public market data feed which traders and investors use to access critical information on public markets, the impact would have been more severe. Even still, there are some takeaways from this event. A positive: the success of the SEC Regulation NMS implementation. A negative: critique of the initial communications from the NYSE. Let’s examine these a little closer.
A Win for SEC Regulation NMS
The technical issues that caused the NYSE to suspend operations on July 8th occurred as the result of a new software rollout. All open orders at the time were canceled. Most investors were able to continue trading utilizing one or several of the 11 other Exchanges or 40+ dark pools to execute trades. A recent Wall Street Journal article1 indicated that as of 2005, 80% of the trades conducted across the U.S. stock market were via the NYSE. That figure currently stands at about 20%, in part because of a 2007 regulation commissioned by the SEC called Regulation NMS (national market system). This rule, enacted in 2007, allows for orders to be directed to the exchange that quotes the best price. It also reduces transaction fees for investors as a result of increased competition. Therefore, there is fortunately redundancy and flexibility for traders if a single or multiple markets are experiencing downtime. Had July’s technical glitch taken place a decade earlier when the majority of US stock trades were executed on the NYSE, the impact would have been more severe.
If you’ve seen or read the news lately, there’s been a lot of talk about the recent Ashley Madison hacking scandal, by which a group of hackers known as Impact Team attempted to blackmail the site into shutting down – or risk having the information of some 37 million members released. Member information, including account details and payment transactions, was ultimately released over the Dark Web. Sounds spooky, yes? But what exactly is the mysterious Dark Web? And how can you access it? Here’s what you need to know about the Internet’s black sheep.
The Dark Web: What exactly is it?
In essence, the Dark Web is a cloaked portion of the Internet only accessible to users with specific software or authorization. It is part of the Deep Web – a section of the World Wide Web not indexed by search engines, meaning your standard Google and Bing crawls won’t do the trick.
Much of the concern surrounding the Dark Web has to do with the types of activities generally perceived to take place there. As you can see in Figure 1, according to Dr. Owen Gareth’s presentation “Tor: Hidden Services and Deanonymisation,” the majority of so-called hidden services lurking in the Dark Web are worrisome. Drugs, fraud, counterfeit, hacking, porn, abuse, guns, gambling: the list goes on. And let’s not forget the identities of the alleged cheaters from Ashley Madison.
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The following article is part of our Hedge Fund Insiders Article Series and was contributed by Eze Castle Integration (us!). Read more articles from the Series HERE.
Technology was historically an afterthought for many hedge funds and a “check-the-box” item at that. Many firms took the approach that they could get away with the bare minimum on the technology front, often overlooking the reality that technology today is a critical component to a hedge fund’s daily operations.
Today’s hedge funds are generally embracing the role technology plays in investment management operations. In fact, in today’s competitive landscape and with investors expecting more than ever from funds, technology has really emerged as a competitive differentiator and an asset that can help grow a firm’s business.
2015, specifically, has posed its challenges for hedge funds and investment firms, as the Securities and Exchange Commission (SEC) and the investor community as a whole have highlighted cybersecurity as one of the most critical areas of focus. Beyond security, hedge fund startups continue to face challenges as they look to keep pace with their established competitors and make their own impression on the marketplace. From a technology standpoint, we’ve identified three top priorities for hedge funds and investment management firms looking to find startup success.
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