Arcesium has proved itself to be a valuable technology provider to both hedge funds and fund administrators alike. The vendor has built on its partnership with JP Morgan, and in October last year, the bank converted a substantial portion of its Alternative Investment Services business to Arcesium’s new technology platform.
The platform allows end users to have their own technology, data model and integration to inbound and outbound systems, while connecting to their administrator for NAV calculation and all investor-related services and communications.
Then in February, Arcesium launched a new suite of modular technology products and solutions for alternative asset managers, designed to integrate into a client’s existing technology and improve the efficiency and accuracy of their middle- and back-office operations. The firm has also set out plans to hire 100 new staff to build out its technology.
In addition, Arcesium has also targeted treasurers at hedge funds in order to provide them with a comprehensive house view of their data and then use that information to act more proactively in responding to stakeholders, their counterparties, and future market changes.
These technology solutions are becoming instrumental to the chief operating officer (COO) or the chief financial officer (CFO) of the alternative investment manager, as they are forced to deal with an expanded role to include technology, compliance and investor relations.
“Not everything can be solely a technology or a compliance issue, they are interrelated and the COO/ CFO needs to oversee solutions that are required to tick multiple boxes,” David Nable, head of commercial strategy, Arcesium told Global Custodian earlier this year.
ENSO Financial Analytics
The past 12 months have been eventful for ENSO Financial Analytics, a provider of analytics to both hedge funds and prime brokers. Beginning the year under the ownership of CME Group, following the Merc’s $5.5 billion acquisition of NEX, it was then sold to Hazeltree, a provider of integrated portfolio finance and treasury management solutions, in October.
The acquisition reflected the industry’s recognition of how valuable data and analytics services have become to the hedge fund and prime brokerage industry.
In April, the firm launched the ENSO Data Insights suite, a community benchmarking tool providing hedge funds, asset managers and banks with access to a diverse pool of global multi-asset class securities to help them compare best execution financing rates, trend analysis for long and short position sector changes, sector breakdown, top position movers, crowdedness scoring, and the most active stock borrow rate changes as it relates to the ENSO Rate.
The tool helps clients evaluate how market dynamics are driving costs and demands to borrow stock, optimise counterparty management and seize alpha-generating opportunities.
“Historically, there was never a level playing field between the hedge fund and their custodian, prime broker and fund administrator as it was always a one-sided conversation on the data and investment on technology,” Paul Busby, CEO of ENSO Financial Analytics, told Global Custodian. “Now it is much more levelled, and hedge funds are using vendors such as ourselves to
calculate their wallet and what they pay to the bank broken down by products.”
Similar to ENSO, Viteos was also involved in one of the more significant deals in the fund services space when fund administrator Intertrust acquired it for $330 million. The deal came just three months after Intertrust signed a strategic partnership with Viteos in order to develop its own technology services.
With some 715 employees, Viteos operates a global delivery model with its headquarters and sales team in the US and Centres of Excellence in India. It earns the bulk of its revenues in the US – which served as a key attraction for Dutch-based Intertrust which has made a number of efforts to grow its US presence.
Meanwhile, Viteos is becoming increasingly used by managers that are operating their own shadow fund accounting and investment book of record (IBOR) operations. For example, it carried out a pilot for a hedge fund where it took all of their trades for a past period, and analysed the cost of placing them through the most optimally priced broker versus the ones they were using out of habit or relationship.
“We were able to show they could have saved a few million dollars if they had leveraged technology in making the determination of where to place their trades. Efficiency through better processes and technology is not just a cost advantage but in many situations can result in quicker processing and turnaround times, leading to better decision-making,” said Shankar Iyer, chief solutions officer at Viteos (an Intertrust company).
One of its key initiatives for the year has been a programme called ‘Ops2Tech’ – delivery transforming applicable operations processes with technological solutions. “The real value proposition is the continuous improvement of operations by employing automation solutions each day that improve STP,” Iyer added.