Regulatory environment pushes more hedge funds to the cloud
by Abacus Group, on May 17, 2012
Opalesque Regulatory environment pushes more hedge funds to the cloud
By Bailey McCann – May 17, 2012
The growing regulatory environment is pushing more hedge funds to the cloud according to the Abacus Group. Chris Grandi, managing director of the US-based cloud provider, explains that as the reporting and transparency burdens grow for funds many are moving into the cloud as a means of mitigating cost while maximizing scalability.
"The way tech is delivered is evolving," Grandi says in an interview with Opalesque. "More institutional investors are looking for funds to be in the cloud. They are starting to question cost when they see on site servers."
This is in part due to regulation he says, "Form PF is changing how hedge funds structure, many are
moving to the cloud as a result." The amount of data the form requires has caused funds to evaluate
their technology and data capture techniques - a boon for Abacus, and it's competitors. Grandi notes
that each new regulation gives them more business.Although it may also have a chilling effect on adding new funds, "if Form PF stays the way it is it will be very hard for new and smaller funds to justify the cost," Grandi says. He notes that some family offices have also started to move to the cloud to provide accessibility and scalability within their operations. Grandi explains that the cost outlay to establish a data center as funds and family offices launch can be prohibitive, managers must pay for IT before they can start charging fees and family offices interested in direct investment can face hurdles without a ready made IT infrastructure.
Abacus offers both off the shelf and bespoke cloud solutions, "many new launches need the same thing from IT so we can provide that or we can let funds build out their own setup if they have that skillset," Grandi says.
The average new launch takes about one day to set up. He notes that 95% of new launches that the firm speaks with choose cloud services, because the cost is known and can be anticipated as the fund grows. Abacus deals primarily with funds that are $10bn and under - speaking to the demand from emergent funds for the service.