Pine River's Rapid Current: CTO David Kelly

It is no surprise then, throughout six months of recent intensive recruitment, that the CTO didn’t bring on a single hire from outside financial services. Pine River’s total staff is about 400 and growing, and there is little room for steep learning curves.

“We’re jointly accountable for outcomes,” Makhija says. “One obvious challenge is developing a global solution for newly cleared swaps. Legal, portfolio, margin teams, and technology are all on that project. There is no divide.”

That sense of engagement pervades as the multi-strategy shop plays in new asset classes—European credit, for example—that incur new operational challenges.

Subtle Scrutiny
“Allowing logic” to drive implementation decisions, as Makhija puts it, is yet another priority. Harkening to his earlier role at Thomson Reuters, Kelly is candid and quite positive about the strength of external providers—provided they can pass his subtle scrutiny—and a full 15 percent of his time is spent evaluating vendor offerings. For example, Pine River, which uses separate externally provided order and execution management platforms, is completing expansion of its EzeCastle Eze OMS installation, consolidating orders in both listed and over-the-counter (OTC) instruments globally.

The firm’s vaunted mortgage arbitrage strategies and broader fixed-income group, meanwhile, are tremendously data-intensive, with Pine River combing through terabytes of housing loan information to determine both where to be aggressive on particular bond issuances, and where to hedge. To cope with that volume, Kelly is experimenting with hybrid data arrays—combining traditional hard disk storage and diskless, solid-state drives to ensure that certain datasets are available more efficiently, while others are stored at lesser cost.

But much of Kelly’s focus—and IT spend—involves Taylor’s third principle: resilience in the face of change, whether in the form of unexpected events or routine source code. The former involves infrastructure. Beyond personnel, Kelly’s greatest investment is around building fault tolerance and a “single target architecture” that spreads risk geographically from the firm’s application base and data management, historically co-located in Minneapolis, to redundant datacenters nearer its trading operations in New York and Hong Kong.

Beijing
The latter piece—managing development workflow—is also about looking east. Pine River established an early presence in Beijing—its head of fixed-income trading, Steve Kuhn, spent an earlier part of his career teaching at top universities in the country—and the firm has built a formidable research presence in the capital. But the technology teams in Beijing charged with both strategic software development and quality assurance (QA) might be just as important. Their veracity, Kelly says, is an indication of just how far buy-side technology has come throughout his career.

“Developing software is like a signature—everyone does it differently,” he explains. “My job is to make sure our solutions can communicate. The quality of the talent in China—both quantitative analysts and software engineers—is remarkable. And these teams are more than just isolated development groups or a service bureau that caters to the work no-one else wants to do. They are tightly integrated with our global trading desks, and are critical in our development lifecycle. Six or seven years ago, only the largest global asset managers would have had this kind of QA and development function.”

“Hand-holding” the data as it is parsed and dissected by portfolio managers throughout the trading day is one responsibility for the team. Makhija adds that the advantage extends to back-office analytics, as well.