How to Determine Which Technology Partner is Right for Your Hedge Fund

How to Determine Which Technology Partner is Right for Your Hedge Fund

This week on the blog, RFA UK Managing Director George Ralph shares his checklist for determining the right technology partner for your hedge fund.

There are many technology partners out there, competing for business from the hedge fund community. But how do you, as a prospective client, choose the right partner for your firm?

I have developed a brief check list which should help you decide between tech suppliers.

Choose a specialist partner who offers a range of services that can meet your needs, and will integrate with your other suppliers, because there are no one-size-fits-all suppliers out there who will understand your business as well as the specialists.

It might be tempting to use one of the dominant technology partners, who have a huge range of services and solutions out there, but remember, they will have a little knowledge about a lot of industries, and won’t necessarily understand the specific challenges faced by hedge funds. A specialist partner may not be able to offer as wide a range of solutions, but they will work closely with your other suppliers to ensure a seamless delivery of services.

Ensure the T&Cs are flexible enough to meet the specific demands of your business now and into the future. Most firms can’t take the risk of being tied into restrictive contracts, so choose a partner who offers flexible terms that can be adapted to meet your needs. If your firm needs unusual support desk cover, then ensure this can be accommodated.

Look at their proven track record. There are many start up tech partners, who indisputably can offer great services, but risk management is a key driver for every hedge fund that we have worked with and unproven firms are a risk that is hard to quantify. In order to mitigate the risks associated with a new technology partner, it is advisable to dig deeper into their history to ensure that they are financialhedge fund technology partnerly viable, with a solid customer base and experienced team to underpin the services they are providing.

Check out their qualifications and accreditations. It might sound obvious, but it is important that your technology partner of choice has the right accreditations and that they invest in keeping these current. Not only does this prove that the engineers have learnt about the technology they are using, it also demonstrates the company’s commitment and investment, both time and money, in their vendor partnerships. When new technology is released, your partner needs to be on top of it. Only then can you maximise your investment.

Ensure they are meeting and exceeding security and compliance regulations. Another obvious criteria, but one which is absolutely fundamental to hedge funds, is security and the ability to meet your compliance requirements. Your technology partner must be able to demonstrate that your data will be stored in accordance with the security requirements that the industry demands. Data centres should be physically secure, adhering to ISO27001 and SSAE16/Type II standards, and with options to encrypt, or use multi-factor authentication should that be required. Intrusion detection and continuous monitoring will ensure uninterrupted service and enhanced cybersecurity protection.

If you are still in doubt, get satisfied customer references from a fellow hedge fund. Never sign a contract without talking to at least one or two satisfied customers. There is no greater endorsement than a peer endorsement. Fellow hedge funds will tell you the truth about the tech partner, whether they are easy to work with, knowledgeable and helpful. These are all things you can’t find out from marketing literature.