Hedge Fund / Case Study

OEMS Displacement

In 2018, Ironfly Technologies completed an OMS migration for a Hong Kong based $500mm+ AUM long-short hedge fund with over 40 high and low touch broker connections trading global equities. The hedge fund team includes compliance officers, analysts and traders. The main asset classes that are traded by the team include equities and listed derivatives in more than 55 exchanges globally, including NYSE, Nasdaq, London, Euronext, Tokyo, China (onshore and connect) and India.

Over the years, the Ironfly team was able to fix a range of issues for this particular client in addition to continually improving their overall trading workflow.

COMPLIANCE AND PERMISSIONING

A core requirement for the system was a trade compliance engine, capable of soft and hard limits; multi-user permissioned review and approval process; reference and market data based checks, with an in-system historical audit trail search and view for all actions.

This compliance engine complements the access control list (ACL) permissioning system, enabling users to have varying access to parts of the system depending on their role - from research roles for non-trading users restricted to certain strategies, to execution only dealer/traders collaborating on combined orders.

WORKFLOW AND DATA

The Ironfly architecture is flexible enough to accomodate the client with their choice of infrastructure. The Ironfly Trading System connects directly into the client’s proprietary database, and at the choice of the client, the entire deployment is hosted and managed by them independently. Market data connections incorporate the major vendors, with the client having connections to both Bloomberg and Refinitiv (formerly Thomson Reuters); with direct electronic trade execution through FIX via Redi Connect integrating the many sell-side connections and relationships.

Having a flexible architecture that allows for an easy connection with other systems, including the client’s existing PMS system. Holdings are synchronized daily with the PMS, and live trades dropped back into the PMS for real-time monitoring.

Symbology is a consistent and expensive source of complexity that experienced market participants know all too well. Despite aggregation of numerous sources, Ironfly has been able to simplify the symbology to a single symbology source for consistency, maintaining the relevant mappings for each external system.

BORROW LOCATE

With a dozen prime and ISDA counterparties combined, the client has the ability to source stock borrow from numerous sources. Complexity then becomes managing the workflow and tracking the rates and status of stock loan. The Ironfly interface provides an in-ticket component allowing the request, comparison, and status from multiple borrow providers. This can then be connected to the compliance system to ensure no shorts are released without the required borrow quantities.

SCHEDULED TRADE RELEASE

For a client trading global markets - Asia, EMEA, and North America - on a daily basis, the practicalities of trade timing become significant considerations. Decisions on trades are often made at an hour where brokers or exchanges are not yet ready to receive them. 

A feature was added for the client that extends the system’s existing order staging functionality allowing the future timed release of an order - at a time when the market is able to receive it, or a time most optimal for execution.

This is done as a feature directly part of the trade ticket, meaning that early hour trades for the next day, or late night trades for the same day, can be queued up as a regular, automated part of the trade workflow.

GTCS (SYNTHETICALLY)

Across Asian markets, not all exchanges support GTC (“good til cancel”) trading. Nonetheless, multi-day orders are a reality for almost all funds - be it for carefully managed large orders, or opportunistic orders left limited away. Ironfly caters for this client requirement with orders that persist within the system across days, adapting to the client’s position synchronization mechanism. For GTC orders that are not supported at the broker/exchange level, prior days’ orders can be re-released for the new day with a 1-click process, automatically utilising the previous trade’s quantity balance, limit, and algo parameters for an efficient, “synthetic GTC” release process. 

VALUE AND AGILITY

Markets, products, and technology are continually evolving. Crucial to a relationship with any technology vendor is the ability to maintain a level of time critical service, and a proven ability to continually deliver meaningful updates to adapt to an ever changing environment.

This combines with the reality that the dollar and time investment a client makes in their vendor must deliver a level of value that magnifies the input and compounds over time.

Whether or not your current technology vendor should be providing more value is an individual decision per client.

Ironfly is dedicated to providing unparalleled value, delivering this not just with technology, but through constant side-by-side work with this and all other clients. The result is rapid evolution from continual client feedback, allowing for a constant enhancement of the product, service, and experience, to the mutual benefit of all.