With cloud-based processing and data storage being embraced by hedge funds and fast becoming the norm, there are enormous opportunites to be harnessed. Derivitec has turned to Microsoft’s hybrid offering – Windows Server 2012 & Windows Azure. Here, Derivitec’s George Kaye (pictured) and Microsoft’s Rob Fraser weigh up the benefits and explore the ramifications of implementing such a system…

With cloud-based processing and data storage being embraced by hedge funds and fast becoming the norm, there are enormous opportunites to be harnessed. Derivitec has turned to Microsoft’s hybrid offering – Windows Server 2012 & Windows Azure. Here, Derivitec’s George Kaye (pictured) and Microsoft’s Rob Fraser weigh up the benefits and explore the ramifications of implementing such a system…

The use of derivatives by hedge funds is well known. In a survey of 5,551 hedge funds from the Trading Advisor Selection System hedge fund database, 71% of the funds analysed used at least one type of derivative product from equity, fixed income, currency and commodities.

Correspondingly, the use of third-party software for pricing and risk managing derivatives positions is not uncommon on the buy-side, though the tendency is to use these in conjunction with in-house systems.

While such an approach is perfectly sensible, there is still a massive opportunity waiting to be harnessed from the public cloud, enabling hedge funds to leverage industry-standard analytics and vast computing power, while paying a small fraction of the cost of a traditional in-house solution.

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