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
SGX’s new FX platform sees increased NDF trading from US firms
Sef exemption opens door to increased US buy-side interest
ICE to offer ultra-low latency data between the US and Europe
The offering will run eastward, connecting routes in the US with European markets in London, Frankfurt, and Bergamo.
Vendors under new scrutiny in CFTC due diligence push
The planned cyber resilience regime will force dealers to subject “critical” tech vendors to stricter audits.
Integration looms large for buy-side firms deciding on whether to buy or build
As high-speed trading systems become par for the course, asset managers turn their focus to integration capabilities, according to a new study.
Refinitiv’s PermIDs: Converting needs into opportunity
Refinitiv’s PermID framework was conceived as a proprietary tool to address an internal challenge around identifying objects in the firm’s information model. Once it had proved its worth, it was rolled out to the firm’s clients to significant success.
FX-style crypto platforms could bridge gap with TradFi
Emergence of execution-only ECNs, prime brokers and clearing houses brings new confidence in crypto
Technology trends in capital markets: Transforming the sell-side FX front office
The capital markets landscape is witnessing a technological revolution – a wave transforming the sell-side FX front office. Firms such as smartTrade Technologies are at the forefront of this transformation, leveraging technologies such as artificial…
Locking down the lifecycle: Trading Technologies turns to analytics and TCA in latest acquisition
The tech provider gains TCA, analytics, and algo optimization tools as established vendors vie to build more comprehensive platforms.