Last year, Eze Castle Integration expanded their award winning Eze Private Cloud services to Asia. The Eze Private Cloud is used by more than 2,000 hedge fund professionals worldwide to simplify operations, minimise upfront capital costs and gain a highly resilient, enterprise-grade IT infrastructure on par with billion-dollar funds.
I recently sat down with Serge Bukhar, Executive Director of International Operations at Eze Castle Integration, to talk about the hedge fund market in Asia, and the attitude and adoption of cloud computing.
What is the current state of the hedge fund industry in Asia?
Singapore and Hong Kong are the hedge fund capitals in Asia. We have seen a contrast between the status of large and small hedge funds in Asia. Many larger funds are struggling, with some shutting down, while smaller funds are increasingly doing well and delivering positive results to their investors. Both groups, however, are looking for ways to increase efficiencies and reduce costs.
It's hard to believe it, but we have officially reached the 300th post here on the Hedge IT blog!
To commemorate this special occasion, we're bringing back the Hedge IT blog awards honoring the best articles, topics and trends from the past year as a way of saying "thanks" to all of our loyal readers. We look forward to continuing this tradition of sharing valuable, thought provoking content with you again this year. Here's to the next 100 posts!
Here on the Hedge IT blog, we love to talk about the cloud. However, most of our discussions focus on the technology and operational considerations for investment firms. This week, we’re taking a different approach and looking at the cloud from a business perspective. On Tuesday we explored the business case for moving to the cloud. Today, we’re taking the CFO’s point of view.
You’re a hedge fund CFO. Your CTO has proposed moving the organization’s IT infrastructure to the cloud using a third party service provider. What questions should you ask to gain a better understanding of the impact this change could have on your team and the firm at large?
While the technology benefits of moving to the cloud are well known, the business case for moving to the cloud is just as important. The hedge fund industry is increasingly moving towards cloud computing not only for the vast technology benefits, but also for the enhanced efficiencies, high quality technology environment, and numerous cost savings. Read on to learn the business case for adopting cloud computing technology at your firm.
Transferring from CapEx to OpEx
Today, many hedge funds are grappling with ways to achieve efficient operations while remaining as competitive as possible. Companies are examining the costs associated with their IT departments in order to determine the best way to make their technology more cost effective. For many firms, this means moving to the cloud. One of the major benefits of adopting cloud computing technology is the resulting movement from CapEx to OpEx.
This shift allows a decrease in capital expenditures (CapEx) and an increase in operational expenses (OpEx), providing potential tax benefits. The tax benefit is the result of OpEx allowing for the deduction of expenses in the current year and the cutting of tax liability applied to net income. Furthermore, there are few upfront capital expenditures associated with adopting a cloud model as there with building out in-house comm rooms and data centers. This is because cloud providers deploy a “pay-as-you-go” service model.
This fall, Microsoft’s new Windows 8 operating system captured the attention of many customers. Windows 8, however, isn’t the only Microsoft change 2013 will bring. Microsoft is planning to provide stricter oversight of its auditing process by conducting up to 30,000 licensing audits on small to midsize companies by 2014. Here is an overview of why you should ensure that your software is up to date and what to expect when it comes to the Microsoft licensing audits.
What are the Microsoft Licensing Audits?
In 2013, Microsoft will conduct audits on customers’ software usage. The audits will be mainly focused on mid-size companies with 500 - 2,000 computers. Many large companies have already put strict companywide licensing policies in place, but smaller firms typically have less formalized processes for ensuring all devices are licensed appropriately. As a result, Microsoft’s auditing focus is shifting to smaller companies. These audits will ensure that clients’ software is correctly licensed and paid for.
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.
Have we mentioned we dig the cloud? Well we do and we are happy to introduce you to the newest addition to our cloud family – Eze App Cloud.
Weighing in at 60+ applications, Eze App Cloud comes to us from the Eze Private Cloud and is tailor made for application vendors servicing hedge fund and investment management firms.
The App Cloud has been a long time in the making and aims to address many challenges, including the need for a central, consolidated cloud platform to run all hedge fund applications and IT services. With adoption of cloud services growing, there are many disparate cloud platforms with varying degrees of quality and customization. We are increasingly seeing clients challenged to integrate applications (i.e. OMS, Risk, CRM) all running on different cloud platforms and networks. The cloud is supposed to simplify operations, not make them more difficult.
Eze App Cloud is prepared (and designed) to be the ONE cloud platform for everything a hedge fund needs.
It’s that time of year again: time to take a look ahead and make predictions for the top technology trends of 2013. I don’t think any of these trends will come as a surprise to you, but let’s take a closer look.
I know - we had this topic on last year’s list, too. But it’s so important, it deserves another nod. Smartphones and tablets have invaded the enterprise world like never before, and we’re seeing companies work more diligently to manage the use of these devices. Strategies such as Bring Your Own Device (BYOD) give firms the ability to allow employees to use personal devices for work purposes. While this provides employees with flexibility in terms of which devices they can use (and eliminates the need to carry more than one), it also highlights the importance of enhancing security measures to protect sensitive company information from getting into the wrong hands. Speaking of security…
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
Stricter regulations and calls from investors for greater transparency are leading hedge fund managers to up their game and enhance their technology infrastructures to become more operationally efficient.
The growing regulatory environment -- Dodd-Frank and the Alternative Investment Fund Managers Directive Level 2 (AIFMD) -- is pushing more and more hedge funds to consider adopting cloud computing as the operational burdens around reporting and transparency continue to grow. To refresh, in April 2009, the European Commission proposed a Directive on Alternative Investment Fund Managers (AIFMs) with the objective of creating a comprehensive and effective regulatory and supervisory framework for AIFMs at the European level. The proposed Directive was aimed at providing harmonised regulatory standards for all AIFMs within scope. ESMA was requested by the Commission to provide technical advice on the implementing measures of the AIFMD (Level 2).
Regulators and investors have played a significant role in the way the alternative investment industry behaves, in return influencing the evolution of technology. Regulatory change and due diligence are the largest drivers of change in the hedge fund space. Even if the changes proposed in your organisation are not regulatory driven in nature, hedge funds need to ensure that internal operations or outsourcing projects are organised is such a way that their output will easily satisfy both existing and future legislative requirements.