New York-based Liquid Holdings offers a significant real-time risk management solution to the hedge fund community. Its cloud-based Liquid platform integrates portfolio and risk analytics by leveraging the firm’s heritage in bringing next generation technology expertise to the hedge fund community.
The days of providing end of day risk reports are fast disappearing. Institutional investors will no longer accept that an intra-day market dislocation may create a significant downside event. They are looking for risk exposure to be run alongside portfolio management and that pre-trade compliance controls are giving front-office teams the ability to predict potential dislocations.
“Hedge fund managers now require advanced predictive analysis and the ability to respond in an ad hoc fashion. Before, risk was defined using more static parameters. Now, the model is one of integrated assets, liabilities, liquidity and risk management in a real-time environment. Risk is evolving dramatically and consequently the systems have to evolve,” says Robert O’Boyle (pictured), Liquid’s Executive Vice President and Director of Sales & Marketing.
The Liquid platform uses a large high-scale low latency database that allows vast amounts of information to be imported and interrogated for decision making purposes by portfolio managers, Chief Risk Officers, etc.
“The Liquid platform gives them an holistic view of their firm’s true risk, performance, and P&L. Continuous real-time risk monitoring provides a much stronger infrastructure for hedge funds to manage risk from an investment management perspective, as well as providing the risk controls and safeguards to protect the fund from downside events. Their investors want and require this level of continuous risk monitoring,” says O’Boyle.
“There are many risk systems that provide VaR, stress testing, volatility management. Where we differ is that we are a born-in-the-cloud technology company. With a single, multi-tenet database we are able to take real-time trade execution data from any system and use that across all aspects of risk analysis and reporting that a hedge fund manager requires,” adds O’Boyle.
Previously, having large-scale sophisticated risk systems was the preserve of the largest hedge fund managers. But Liquid Holdings is changing the game with its platform.
“We’ve built out a fund management platform that could become the risk officer for a hedge fund. If I’m a portfolio manager, to effectively manage risk I need to see those numbers updating side by side with the positions I’m putting on and managing in the fund. You can press a button and get an accurate view of the fund’s risk performance at a moment’s notice; not at T+1,” explains Branden Jones, Global Head of Marketing.
“This is achieved not only through market-tested analytics, but a robust data management infrastructure that ensures precise pricing and valuations in the portfolio on a daily basis.”
Having real-time risk analytics enhances the investment manager’s ability to protect wealth and grow performance in their fund. But this is no longer a future ideal.
“Such capabilities now exist on our platform. Managers don’t realise they can get this level of cost-effective risk management today,” adds O’Boyle, who, on winning this year’s award, concludes: “We are excited to win the global Hedgeweek award for best risk management firm at such an early stage of our company. It is a testament to our market-tested technology and at the same time tremendously gratifying to see our offering recognised for excellence by our peers.”