Blog Entries from 12/2013
I know, I know, we say it every year. But can you believe another year has come to an end? Even more amazing? We’ve now been bringing you fresh content on Hedge IT for nearly four years – including close to 400 articles! As we look ahead to 2014, we want to extend a huge THANK YOU to our loyal Hedge IT readers and hope you’ll stick around to see what we have up our sleeves in the New Year. Here’s a hint: it may even include a fresh new look...
With that said, as we do every year, let’s take a look back at some of our most popular Hedge IT articles from 2013. Here are some of your favorites (and ours, too).
Back in September, we revealed the results of our 2013 Survey: Examining Cloud Usage within the Investment Management Industry. In conjunction with IDG Research, we surveyed more than 100 financial services firms and found that nearly all of them (87%) are using the cloud in some way. Other key findings included the dominance of the private cloud (74%) and the growing belief that the private cloud is just as secure as an on-premise infrastructure. Read the complete survey report here.
Categorized under: Trends We're Seeing Business Continuity Planning Cloud Computing Disaster Recovery Hedge Fund Operations Hedge Fund Regulation Infrastructure Launching A Hedge Fund Outsourcing Security Software
It’s hard to believe, but it’s already the time of year we look into our crystal ball and predict the top technology trends for the coming year. 2014 is right around the corner, so here’s a look at what we think will be some of the dominant topics in the tech world.
Hedge Fund Outsourcing Grows in Popularity
One dominant topic that came up during our Boston hedge fund event earlier this month was outsourcing. According to several experts, hedge funds and investment firms can and should continue to outsource areas of their business to service providers as a strategic initiative. Outsourcing leave the nuts and bolts of any area (be it technology, fund administration, etc.) to the service provider, and it allows the fund to focus on higher value areas including, naturally, investment management.
Cloud Solutions Become the Standard
There is no denying the steady adoption of cloud services among hedge funds and investment firms over the years. In fact, our 2013 Cloud Usage Survey shows adoption has risen to nearly nine out of ten firms across the U.S. In 2014, we believe the cloud will become the de facto solution for businesses as firms gravitate towards the simplicity, flexibility and ease of management the cloud has to offer.
The results from our Global Hedge Fund Technology and Operations Benchmark Study are in and here is a snapshot of the 2013 findings. We surveyed 538 buy-side firms across the United States, UK and Asia in order to discover their front, middle, and back office technology and application preferences.
All survey respondents fell into the following categories within the financial industry: hedge fund (60%), asset/investment manager (13%), private equity firm (8%), fund of hedge fund (5%), non-financial firm (5%), advisory firm (1%), broker dealer (1%), venture capital firm (1%), quant fund (1%), or ‘other’ (3%).
The firms resided in three different 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.
In regards to investment strategy, long/short equity continues to dominate as the most favorable with 45 percent of respondents reporting this to be their primary investment strategy. Other preferred strategies include fixed income (8%), credit (7%), global macro (6%), emerging markets (6%), distressed debt (5%), and event driven (4%). The top prime brokers employed by firms in 2013 are Goldman Sachs, Morgan Stanley, Credit Suisse, JP Morgan and UBS (same as last year).
Now let's look at front, middle and back office applications most commonly used at hedge funds.
They say a picture is worth a thousand words so here is an infographic of our 2013 Global Hedge Fund Technology Benchmark Study that explores the most common front, middle and back office applications and technology used at today's hedge funds.
Yesterday marked exactly five years since the infamous Bernie Madoff was arrested for executing the largest Ponzi scheme in U.S. history. As a result, Wall Street and the investment community has undergone a plethora of changes designed to avoid such scandals in the future. Let’s take a look at the lasting impact of Madoff and what changes we can still expect to see in the future.
Unless you’ve been living under a cave for the last several years, you’ve heard the name Bernie Madoff and understand its association with all things negative: scandal, fraud and disgrace. The former NASDAQ chairman and founder of Bernard L. Madoff Investment Securities LLC (BLMIS) swindled billions of dollars and affected more than 12,000 investors, faking investment returns over the course of multiple years.
Amidst the nation’s most serious financial crisis since the Great Depression, we all learned of Madoff’s devastating scheme. He eventually turned himself in at the urging of his sons and is currently serving 150 years in federal prison for his crimes.
At last week’s Hedge Fund Launch 2.0 seminar, the topic of the malicious Cryptolocker malware that is circulating was highlighted as a wakeup call for why backup and security are nonnegotiable IT components. Questions abounded about this new evolution in malware so today’s post aims to address the who, what, when and where of Cryptolocker as well as a few other common Qs.
What is Cryptolocker?
Cryptolocker is a new variant of ransomware that restricts access to infected computers by encrypting them and demanding that the victim pay the attackers a ransom in order to decrypt and recover their files. Some versions of Cryptolocker can encrypt local files as well as external hard drives, network file shares and even cloud storage services that allow local folders to sync with online storage. The malware is severe and a real threat. If a company becomes infected and does not have their files backed up the files may be lost.
At Eze Castle Integation we have had clients become infected. Thankfully in these cases the clients had the appropriate backup systems in place and were able to restore the files to the pre-infection state. As of this time, the US-CERT says the primary means of infection appears to be phishing emails containing malicious attachments. The attachments may look like legitimate emails, so it is important to remind users not to click on any email links if they do not know the sender.
As we look forward to 2014, we can expect that the hedge fund and investment management industry will continue to evolve and experience change as in years past. As more and more new funds launch, the competition for investors will increase and firms will be hard-pressed to live up to the successes of the top performing funds in the industry.
Earlier this week, we gathered several panels of experts in Boston to share their insights into the hedge fund landscape for startups in 2014 and the tips and advice for firms looking to compete in the changing marketplace. Following is a brief recap of the event.
Building a Hedge Fund is Like Building Any Successful Business
When starting a new firm, it’s critical to think about all aspects or forming a new business. Yes, your investment strategy is important, but if the foundation of your business is not critically thought out, it will wreak havoc for your firm. Following are a few areas you shouldn’t overlook as you go through the launch process.
Last week, the Eze Castle Integration London team along with industry experts from the Financial Conduct Authority (FCA), Investment Management Association (IMA), HSBC, and Simmons & Simmons got together to address the FCA’s “Dear CEO” letter on outsourcing, which was issued to CEO’s of asset management firms back in December 2012.
In the “Dear CEO” letter, the FCA identified that the asset management industry outsources a number of activities to service providers and the FCA’s major concern was if a service provider was to face financial distress or serve operational disruption, the UK asset managers would not be able to perform regulated activities.
Our panel of experts gathered together to discuss the letter in more detail and what practical steps asset managers should adopt, including reviewing contingency plans to ensure managers are minimising risk and have a continuity strategy in place. Let’s take a closer look at what was discussed.