London Hedge Fund Due Diligence Seminar Recap
On 30 March, the Eze Castle Integration team in London hosted their first due diligence seminar at St. James’s Hotel and Club.
The seminar featured a panel of experts: Simon Eyre, Director at Eze Castle Integration, Doug Bendle, Senior Manager at PricewaterhouseCoopers, Paul Chain, President at AIS Fund Administration, and Ian Howard, Operations Analyst at Mediobanca.
In today’s market, investors’ expectations are at an all-time high, making the Hedge Fund Due Diligence Process a critical area of importance to raise new capital. I sat down with Simon Eyre to discuss some of the questions covered at the seminar.
As a technology provider how does Eze Castle participate or provide documentation to the due diligence process?
At Eze Castle we believe documentation is absolutely critical to a successful Due Diligence Questionnaire (DDQ) and regularly assist clients with completing the technology portion of a DDQ. A technology blueprint of the environment is an excellent tool for leading a client through the technology section, as the blueprint provides a clear visual aid to assist in clarifying technical questions.
To ensure all answers are addressed accurately and thoroughly, we may gather information from various teams within Eze Castle, including our networking specialist, storage specialist as well as our traditional server team. All of this has to be managed and compiled is such a way that no question is left with ambiguity.
Business Continuity and Disaster Recovery have become extremely important for funds. What lessons has Eze Castle learned over the years?
Financial services firms must react swiftly, methodically and successfully when confronted with unexpected business disruptions or risk highly significant financial loss.
At Eze Castle we help clients fully prepare for unexpected situations which may arise by putting in place disaster recovery systems that minimise concerns such as revenue loss, damaged client relationships and reduced productivity. Thorough disaster recovery planning allows firms to resume business operations seamlessly when they are faced with unexpected issues.
A solid disaster recovery plan forms a platform for a successful business continuity plan.
In the event of a disaster or outage, firms will need to ensure that their data and applications are protected and remain operational. How does Eze recommend funds back up their data?
We recommend the following steps to back up and protect business data:
- Firms should begin by identifying the most critical data and systems and making sure they are well documented in any disaster recovery plan. For example: restoration of gigabytes of a user’s iTunes folder, which likely should be there in the first place, must not be prioritised the same as a portfolio manager's mailbox.
- Data should be backed up via a digital archiving service. Digital archiving involves using digital storage to take snapshots or copies of your data, which is either stored locally or in a remote location. This allows for rapid access to critical files in the event of an outage.
- Retain backup logs. This can be in the form of off-site back-ups or tapes.
- Test your disaster recovery system frequently (at least quarterly), and show the results to investors
Are investors more IT savvy in their due diligence with investment managers than in the past?
Larger investors are starting to use technology specialists within their Operational Due Diligence teams to fully inspect a hedge fund's technology operations. This focus on technology as part of the due diligence process was not something favoured in the past. As a result of this increased scrutiny, hedge funds should bring in their service providers, such as Eze Castle Integration, to assist with the DDQ and help answer investor’s questions.