With any buisness solutions these days, it requires the integration of multiple vendors, services and products, Hedge funds are no different. I have now worked for Hedge Fund Administrators (Citco), worked with Hedge Fund Administrators (globeop) and had dealings with a number of prime brokers ( Goldman Sachs, Morgan Stanley, Bank of America to name but a few ) and also those all important order entry systems, Bloomberg, TradeWeb , Kondor, and others.
Each of the above have their advantages and disadvantages, which is not the subject of this post, all of them have one thing in common, they stand alone, as products and services, i.e. their connectivity is limited or non existant between them.
So, a day in the life of a hedge fund on the operational side (approx and no comment here on trading stratgey, analytics, etc ) is as follows
1. Trade is booked into an Order Entry System, there may be multiple order entry systems, depending on the product mix of the Hedge Fund and the capability of the products being used.
2. Orders are submitted to Prime Broker where appropriate, there may be more than one prime broker involved. If no Prime Broker, then need to deal with the Dealer's directly.
3. Orders are submitted to a Fund Administrator, like Citco, or depending on the needs of the hedge fund there may be multiple Fund administrators involved, for example think Managed Accounts.
4. End of Day, each system that has a record of the trade needs to send enough information back out so that each system can the reconcile between each other, this activity is usually thje responsibility of the Hedge Fund, not of the ssystems/products that you are using. This is crazy
So much of my day to day life is spent discussing file formats with each vendor, and testing the process, i.e. generating the data, deliverying the data, and reconcilling the data, and for each system you interact with it is the same process.
I have seen FPML file formats, all kinds of delimited text files, even Database dumps from systems.
Each vendor assures me that they are trying to improve the process, i.e. some are looking to offer Web Services as a way to deliver information, others are wanting to standardize on FpML format, and others are just trying to keep up with the volume of clients that they are servicing.
What it sounds like to me is that there should be a service offering that removes the integration effort from the Hedge Fund, more to come ...