A Case Study in Vendor Evolution
In the January issue of Waters, we profile Olympian Capital, along with its founder, Michael Levas, and its recently hired chief investment officer Arun Kaul. Olympian is a small hedge fund based in Fort Lauderdale with an interesting story to tell.
To build its new multi-asset trading platform, the firm chose to tap into the vendor community rather than keep the project in-house. This jumped out at me because prior to joining Olympian, Kaul was the co-founder of Hillsdale Investment Management, a Toronto-based hedge fund.
For 15 years, Kaul had built all the firms systems internally, rarely turning to the vendor community. He and Christopher Guthrie grew the firm from $2 million in assets back in 1996 to a respectable $500 million today.
So Kaul is deeply familiar and experienced with how to build a trading platform. Yet when he got to Olympian, he decided to buy.
"In my previous life, we built everything—risk management, portfolio management, research, trading and execution, which is the hardest part to build in terms of keeping up with the new technologies and straight cost," he says. "Here, it was a pure business decision to outsource the technology and not build in-house because it's a huge commitment—you can't half-build something."
On the front end, Kaul says, the vendor community has massively improved its offerings—from trade execution to portfolio design—and third-party algorithms are much improved, too. In addition, there is a massive amount of cheap, yet good, data available. The challenge, he says, is aggregating that data—and all the various systems—in a responsible, efficient manner.
"A lot of what we built at Hillsdale is available today at a much, much lower cost," he says. "The challenge is aggregation because you can get pieces of it and you have to then put it on a platform to bring it together."
Where the vendor community needs to improve, says Kaul, are in the areas of risk management and accounting systems. He believes that vendors can do a better job of offering solutions for the back office.
My colleague Sitanta Ni Mathghamhna recently wrote a story that highlighted some of the frustrations that the trading community has with vendors. The main problem, says Barry Chide, head of research and innovation at HSBC, is that they do not provide "complete" offerings, and they don't have adequate solutions to deal with new regulations, such as in the over-the-counter (OTC) derivatives space.
Basically, firms are looking for solutions to solve very complex processes—something that can work front-to-back—but they don't want the solution itself to be complex. Easy enough, right?
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
Chris Edmonds takes the reins at ICE Fixed Income and Data Services
Edmonds is now leading ICE’s fixed income and data business as the rush to provide better data and analytics in fixed income builds.
Systematic tools gain favor in fixed income
Automation is enabling systematic strategies in fixed income that were previously reserved for equities trading. The tech gap between the two may be closing, but differences remain.
Waters Wrap: Examining the changing EMS landscape
After LSEG’s decision to sunset Redi, Anthony examines what might lie ahead for the EMS space.
This Week: Clear Street, AXA/AWS, TD Bank/Google Cloud and more
A summary of the latest financial technology news.
LSEG to sunset Redi EMS in favor of Tora
Sources say competitors will look to seize on the decision to win over Redi’s sizeable US client base.
WatersTechnology latest edition
Check out our latest edition, plus more than 10 years of our best content.
Getting aggressive: Overbond uses AI to assess dealer axes
The fixed-income analytics specialist has developed a new tool to help buy-side firms decide if they’re getting a good price from their dealers.
Most read
- Chris Edmonds takes the reins at ICE Fixed Income and Data Services
- Deutsche Börse democratizes data with Marketplace offering
- Sell-Side Technology Awards 2024: All the winners