Over half of systematic hedge funds surveyed or interviewed for a new report by Acuiti – Bringing the case for buy-and-build to the front office – are utilising a combination of both outsourced strategies and in-house development to build their front office technology stacks.

Over half of systematic hedge funds (58%) surveyed or interviewed for a new report by Acuiti – Bringing the case for buy-and-build to the front office – are utilising a combination of both outsourced strategies and in-house development to build their front office technology stacks.

Acuiti's research, conducted in partnership with global fintech Broadridge Financial Solutions, highlights a significant shift in long-standing attitudes towards the sourcing and development of front-office tech, with systematic hedge funds having traditionally placed high value on the development of trading strategies in-house as the main way they differentiate themselves from competitors. 

Historically, funds have been reluctant to entrust third parties with this technology build, not just for reasons of IP but also fears over losing the ability to take control of troubleshooting when systems malfunction, but attitudes are clearly changing, says Acuiti.

The report also reveals that latency is the key factor in determining attitudes to outsourcing front office technology, with firms for which latency is critical more likely to develop in-house.
 
The front-office functions that funds are most likely to outsource meanwhile, are EMS, market data feeds and front-end trading screens, while buy and build platforms are emerging as a new alternative to choosing between off-the-shelf solutions and in-house development.