These are exciting times for the financial technology sector. In the last few years, market complexity has grown in response to increased regulatory demands, increased investor due diligence requirements, more complex fund strategies and even how hedge funds manage their balance sheets with their prime brokers.
These demands are in turn putting pressure on technology specialists to innovate. One firm that is helping pioneer the way that hedge funds streamline their operations is Eze Software Group. According to President Jeffrey Shoreman (Pictured), "we feel we are driving innovation in this space by bringing together front, middle and back office functionality in ways that have never been done before."
Eze Software Group was established in 2013 by bringing together three industry-leading platforms: Eze OMS, RealTick EMS and Tradar PMS. As such, integration lies at the heart of the firm, having knitted together these three solutions to create Eze Software Investment Suite. Users can choose to either use the three products in isolation, or altogether in a single offering that also includes Compliance, Data Management and Commission Management applications. This provides a consolidation solution to manage the investment lifecycle from portfolio analysis and modelling, through to trade execution, order management and reporting.
"One of our major focuses has been integrating the execution management functionality and the compliance engine. This allows pre-trade compliance checks to run seamlessly at trade entry and throughout the trading lifecycle," explains Shoreman.
"Data has to be synchronised for that to happen. In the past, an order would be generated in the OMS and then staged or re-keyed into the manager's execution management system but that meant losing some of the compliance checks. If the order changed they would have to swivel back into the OMS and update it. What we've done by bringing the EMS and compliance functions together is to allow the compliance checks to run natively within the EMS. A manager might have a global disclosure rule that they have to file when the fund reaches a certain holding percentage. They can now see that directly in the EMS without having to swivel back to the OMS."
There are plenty of technology providers who offer integrated EMS/OMS systems, but what makes Eze Software unique is this: because the systems both reside under one roof, they use synchronised data. In order to get a firm-wide view of compliance, "clients need to have all the transactions and positions in one place for the compliance system to evaluate them. This means the manager can track their exposure and risk more accurately," adds Shoreman.
Another example of how Eze Software Group is building a single suite to help managers reduce their operational risks is by integrating the OMS and PMS functionality.
As Shoreman explains: "Historically, order management systems were the intra-day book of records; one could manage all of the positions and transactions but then you'd have to shift them over to the accounting system, or the portfolio management system, to do shadow NAV and month-to-date and year-to-date P&L calculations. We are bringing the OMS and PMS functions together, so that when you would enter a trade into the OMS, it automatically would flow through into the PMS, allowing you to see updated positions."
Investors want more timely updates on how their portfolios are performing and hedge funds are trying to become more efficient in doing this.
"We can offer one process where technology is driving efficiency front through back and reducing human error to streamline a hedge fund's overall operation," concludes Shoreman