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Launching a Hedge Fund – Technology Considerations

By Kulvinder Gill | Thursday, April 5th, 2012

Last week, the Eze Castle Integration team in London hosted a breakfast seminar, in conjunction with HFMWeek, on how to successfully launch a hedge fund. The seminar featured a panel of experts:

  • Simon Eyre, Service Director at Eze Castle Integration

  • Bill Prew, COO at James Caird Asset Management

  • Gus Black, Partner at Dechert LLP

  • Jae Yung Kwon, EMEA Prime Brokerage, J.P. Morgan

Numerous topics were covered including investment strategies, approaches to raising capital, regulatory considerations, service provider selection, and technology systems. In today’s article we’d like to dive a little deeper into the key technology requirements that all funds must consider when starting up. These include infrastructure, telecommunication and compliance and archiving.

Secure, Available Infrastructure

One of the first decisions a new start up needs to make when it comes to technology is whether they will use a traditional on-premise model or go with a cloud computing service. The cloud model is increasingly winning out as most hedge funds do not view IT as a core competency and value having a third party manage everything. When it comes to the cloud provider’s environment, you want to ensure the infrastructure is N+1 and has a multi-tiered security approach for physical and virtual security.

Internet Service

Hedge funds wanting maximum availability should select a T1 line and consider using two service providers in case one Internet line goes down. Tip: look for a provider that can offer proactive monitoring and security features to achieve 24/7 availability.

Data Protection

Disaster recovery and business continuity plans are vital to every hedge fund of every size. When you are creating your disaster recovery and business continuity plans consider the following factors:

  • What are the mission critical applications and processes?

  • What are the RTO and RPO for your business?

  • Who are the key people? How are they going to be notified of an emergency?

  • How often is your DR plan tested? (Quarterly is ideal.)

Compliance and Archiving

Email archiving is important for firms to comply with legislation and regulations regarding the archiving of electronic mail for eDiscovery reasons and other legal issues. Email and IM data should be saved for the required length of time as prescribed by law. Data should be stored in WORM (Write Once, Read Many) format so that nothing can be changed or deleted. Records need to be indexed in searchable files to aid in providing only the information that is requested. The best way to store data is on its own offsite server, accessible via the Internet.

Service Provider Selection

Once you have assessed your firm’s technology requirements the next step is to select the right service provider. When it comes to selecting the right service provider there are many factors to consider, such as:

  • Experience in Deployment

  • Breadth of Solutions

  • Depth & Quality of Staff

  • Technical Expertise

  • Project Management Experience

  • Disaster Recovery Policies & Procedures

  • Reputation

  • Geographic Reach

  • Flexibility

It is also good to find a service provider with a “Can Do” approach that takes ownership for the task, pro-actively identifies and resolves issues promptly and keeps to the timetable.

Launching a hedge fund can be a complicated process, so we have listed some useful resources to help you get your firm successfully off the ground.

Additional Resources:

Emerging Managers Guide Book

contact an eze castle representative

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