In its 2015 priorities, the SEC’s Office of Compliance Inspections and Examinations (OCIE) listed cybersecurity as a key focus area in its risk-based assessments. Then on February 3, 2015, OCIE released summary findings from its Cybersecurity Examination Sweep.
OCIE’s sweep focused on written documentation for their assessment and conducted "limited testing" of the accuracy of the responses. They did not review the technical sufficiency of the firms’ programs either. OCIE’s reliance on documentation highlights the importance of complete Written Information Security Policies.
Following are noteworthy items Eze Castle Integration observed in reviewing the findings.
Most firms adopted written information security policies, but 43% of advisers did not conduct periodic audits to determine compliance with these information security policies and procedures.
49% of advisers did not discuss mitigating the effects of a cybersecurity incident and/or outline the plan to recover from such an incident in their written business continuity plans.
The vast majority of examined firms conduct periodic risk assessments, on a firm-wide basis, to identify cybersecurity threats, vulnerabilities, and potential business consequences. However, only 32% of advisers require cybersecurity risk assessments of vendors with access to their firms’ networks.
In the Written Information Security Plans (WISP) Eze Castle Integration creates for clients, we include service provider risk assessments as a standard element.
As technology changes, it can become overwhelming to keep up with. That’s why we’ve decided to take a step back in today’s blog article to go over some of the basic vocabulary involved in cloud computing. Here are 10 terms to get you started:
Services or applications that are hosted in a web-based repository known as the “cloud”; the service is often hosted by a third-party provider who then provides access to that service to users on an on-demand basis via a network connection. This alleviates that firm from having to purchase and maintain costly infrastructure in-house.
A facility used to house computer systems and associated components, such as telecommunications and storage systems; typically includes redundant or backup power supplies, redundant communications connections, environmental controls and security features. The Update Institute classifies data centers into four tiers based on the percentage of availability and uptime.
Like David bravely dueling with the larger Goliath, small and mid-sized investment firms are often faced with insurmountable odds when competing against larger (and better endowed) funds. With more experience and more assets, larger firms have the advantage when it comes to soliciting investor allocations. But do these inherent shortcomings equal certain failure? If David can emerge victorious, can’t smaller hedge funds?
Earlier this week, we gathered a panel of experts in San Francisco to discuss this topic at length. Following is a brief synopsis of the topics they covered.
Today, we're excited be hosting the 2013 London Hedge Fund Cloud Summit at the Prince Philip House in London. The event features a variety of industry experts participating in thought-provoking panel disccussions focused on the cloud adoption trends shaping the investment industry. Conversations will touch on everything from the differences between public and private clouds to cloud security and application hosting.
In honor of this event and to provide a visual to help encapsulate the many benefits that come from leveraging a private cloud, we have published a new infographic entitled “You Might be a Private Cloud User If…” Check it out to see the top 10 signs that you are likely a private cloud user. For more information and details on the 2013 London Hedge Fund Cloud Summit please visit the event page. Also, be sure to look out for a recap of the event here on the Hedge IT blog next week!
Yesterday our VP of client technology, Steve Schoener, presented on a California Hedge Fund Association webinar about building an institutional infrastructure at today’s hedge funds. A lofty topic (so consider this a basic primer), Steve focused on four key discussion areas, which we’ll recap here. They were:
Investor Expectations of IT
On-premise & Cloud solutions: Which is right?
Security Risks & Best Practices
Disaster Recovery How-Tos
You can watch the 30-minute webinar now or keep reading below.
The latest HFR Global Hedge Fund Industry Report found that hedge fund assets increased by $60 billion in the fourth quarter of 2012, bringing total industry capital to a record $2.25 trillion. With hedge funds posting performance gains and the new year upon us, we expect to see new hedge fund launches take off.
Technology is just one of the many areas to consider when starting a hedge fund. To help jump start the process, below is a list of some commonly asked questions we receive.
Where do I start in creating a technology budget for my hedge fund?
It is important to note that whether a firm selects to go with an in-house IT solution or cloud computing there will be implications on technology budgeting. Once in-house versus cloud is evaluated, it is important to think about the workflows and systems you use to complete your work – be it email, reports, phones, market vendor applications, and/or risk systems. You can find a technology budgeting worksheet here to help with your planning.
Last month our friends at eSentire published a Cloud Security Checklist to provide hedge funds and alternative investment firms a guide when evaluating a cloud provider such as Eze Castle Integration. The Checklist asked the question, “How can you know if your Cloud Service Provider has your best risk management interests in mind?”
Since here at Eze Castle Integration we are big proponents of secure cloud computing, we thought we’d be the first cloud service provider (that we know of!) to complete eSentire’s checklist.
1.0 Physical Security: Does the cloud provider have a rigorous physical access protocol?
Yes, yes and yes. Eze Castle has detailed Access Control and Premise Access policies that extend from physical to virtual environments. Following are some of the key physical access control protocols we have in place:
24x7x365 manned lobby with visual verification of identity
Two-phase authentication of visitors (card and biometric)
Secured access at all entry points, including doors and elevator banks
Monitored security cameras as well as door, motion and camera sensors
Visitor logs closely monitored and escorts required at all times
Key-locked cages and cabinets at all data center facilities
Last week, we revealed the results of our 2012 Hedge Fund Operations & Technology Benchmark Study, which surveyed over 300 buy-side firms about their front, middle and back office technology and vendor preferences. This year’s findings underscore the need for investment firms to employ robust systems to support trading operations and meeting increasing regulatory and investor demands.
Below is a summary, but you can download the full report here.
Within the financial services industry, Eze Castle surveyed 320 firms including hedge funds (61%), investment managers or investment banks (12%), private equity firms (7%), fund of hedge funds (4%), broker/dealers (2%), and venture capital firms (1%). Additional firms included in an ‘Other’ category include family office, legal, real estate, endowment, quant, biotech and insurance brokerage.
Firms surveyed fell into three 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.
Is your firm registered with the SEC? Do you manage one or more private funds with assets of at least $150 million? If you said yes to these questions, then you have some homework to do. Under SEC regulations, your firm is required to file Form PF.
During a recent webinar, we asked ACA Compliance Group to talk us through the requirements and recommendations for filing Form PF as well as some additional compliance program recommendations. Below is a short recap of ACA’s presentation. To listen to the full replay of our event, click here.
Form PF: Requirements & Recommendations
Depending on your firm’s fund type and assets under management (AUM), the deadline for your Form PF filing may be sooner rather than later. Larger funds - including hedge fund managers, liquidity managers and private equity managers - will need to file sooner, while the majority of registered investment advisers won’t need to file until early next year.