Regs, Investor Scrutiny Drive Hedge Fund Focus On Technology

Apr 20 2011 | 2:24pm ET

With new regulations on the horizon and investors clamoring for increased transparency, alternative investment firms are focusing on technologies that help them manage, protect and more effectively use their data, according to a new study by Eze Castle Integration.

The IT services and consulting firm questioned 223 hedge fund and alternative investment firms about their use of technology in both front and back-office operations.

According to the survey, the “vast majority” of front office employees get their market data from Bloomberg, 43% use multiple vendors for analytics, and the most widely used OMS/EMS was BNY ConvergEx’s Eze (In 2006, BNY ConvergEx Group acquired Eze Castle Software, one of four spinoffs from the Eze Castle “family” of companies, another of which was Eze Castle Integration.)

Investor scrutiny and the Dodd-Frank Act are combining to encourage middle and back office adoption of email and instant messaging archiving.

According to the survey, Advent is the most popular portfolio accounting vendor among middle and back office respondents, although the market is diverse.

Respondents also use a broad range of solutions for risk management, although 19% cited either Microsoft Excel or a proprietary in-house system.

Blackberrys are used by a whopping 95% of respondents, but the survey found signs that iPhones, iPads and other tablets could make inroads in future.

Of the firms surveyed, 56% had AUM under $250 million, 17% had AUM between $250-750 million and 27% had AUM above $750 million. Most have one location; 35% use a multi-strategy approach; and when it comes to primary and secondary prime brokers, Goldman Sachs, Morgan Stanley, JP Morgan and Credit Suisse maintain a stronghold over the majority of firms.

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