Paladyne Systems, a New York-based technology provider, on Monday launched a new turnkey front-to-back office service for start-up hedge funds called Paladyne FastStart.
The new platform allows smaller hedge funds – those with under $1 billion in assets under management -- to benefit from the same technology as larger funds. There is one condition: they must buy all of Paladyne’s front, middle and back office services off-the-shelf; with little-to-no customization.
Larger hedge funds typically require heavy integration as well as customized exposure, financial statements, valuations and investor reports. They also have long-time applications they don’t want to replace. Hence, they are more likely to use a customized version of a particular Paladyne offering.
Paladyne FastStart includes a multi-asset class trading and order management module; pre-and post-trade compliance tracking and reporting module; a module for real time views of profit & loss and portfolio exposures; a module for intra-day risk analysis and model-based valuations; a module for net asset value reporting, daily portfolio accounting and performance attribution; and a module for daily reconciliation and shadow reporting with fund administrators.
“Start-up hedge funds are looking for a quick way to jumpstart their operations and need robust systems,” says Sameer Shalaby, chief executive of Paladyne, adding that the new service is geared toward hedge funds with under $1 billion of assets under management.
George Roeck, chief financial officer of Charter Bridge Capital Management, a New York-based hedge fund manager which opened its doors on October 1, says that the time to market and cost savings were critical to his selection of Paladyne’s system.
“We had already decided on a prime broker and a fund administrator and were looking for a system to package all of our technical needs,” he says. “It would have been far more costly and time-consuming for us to license and manage a full-blown accounting system and other middle and back office systems.”
Shalaby estimates that smaller hedge funds could save anywhere from 40% to 60% in technology costs using Paladyne instead of either building or licensing multiple applications. Those costs don’t include integrating the applications with each other.
Hedge fund IT experts say that it could easily cost a start-up fund over $1 million to build or even license the necessary technology to start its operations. And it could take several months to finish such a project. By contrast, installing the Paladyne turnkey platform would take less than three months.
So far, the new FastStart service has attracted thirty start-up hedge funds including Charter Bridge. An additional 125 hedge funds, fund administrators and prime brokers use Paladyne’s full suite of products.