There are numerous everyday phrases that denigrate the simple act of talking. People like to say “talk is cheap”, or that someone might be “all talk and no action”. In the case of hedge fund traders, however, it’s the opposite. Talk is everything.
The typical day in the life of a hedge fund trader can involve a seemingly endless series of conversations with a huge variety of people. There are portfolio managers, investment relations executives, sell-side brokers and dealers, institutional investors, risk management, compliance – the list is long and diverse.
The conversations may be extremely brief – the confirmation of a single number, a decision on whether to move ahead, or the acknowledgement that a deal has been done. Or, they may be much longer – a detailed discussion about a particular trading approach, a run-through with a PM of a complex trade in order to understand all of the nuances, or a discussion about a compliance-related issue.
Either way, these conversations must take place in secure, robust and resilient environments. The functionality of the system, in terms of speed and ease of use, needs to be guaranteed. What is more, many of the conversations will have to be recorded, stored and made searchable. Ultimately, they are at the heart of what makes the firm profitable.
This is why the communications system that a hedge fund relies on has long been a crucial part of the operational infrastructure, and also why the most successful funds are those that recognize the extent to which the system needs to be best in class and fit for purpose.
In recent years, a number of external forces have underlined the significance of communication systems when it comes to a hedge fund’s bottom line performance.
One of those forces has been the pandemic. It has made everyone focus much more on the value of mobility and trading remotely.
Another major force is the incremental growth in trading regulations. The rules governing all aspects of trading have become more stringent. As a result, the communication system a firm deploys can make an enormous difference not only in terms of whether it is staying withing the guardrails, but also in terms of the cost and effort required to carry out regulation-related activities such as compliance and due diligence.
One way that successful hedge funds are addressing their communications needs and the impact of these external forces is by relying on a managed service approach. That way, they do not need to worry about capex or owning the infrastructure. Instead, they can focus on their core activities.
Provided hedge funds partner with the right firm, this approach also means that they will be using state-of-the-art equipment and that they can regularly recalibrate the system to their needs. As a fund evolves, its communication system can evolve with it.
Given the complex communication needs that hedge fund traders have, taking advantage of the latest technology is particularly important. For instance, with voice, can a provider offer natural language processing (NLP) to turn what is essentially unstructured data into structured data that can be used throughout the enterprise?
Turning voice into structured data adds value in multiple ways. Whenever there is a question about a trade, instead of having to go through tapes to identify a conversation, a fund can perform keyword searches that instantly zero in the specific recording that is needed. NLP can also be used for auto-populating tickets, creating efficiencies and reducing errors.
NLP is just one of many of the transformative technological capabilities that a cloud-based managed service can offer as hedge funds look to address their many complex requirements. In the end, communication and workflow are intrinsically bound together, which means a communications provider needs to take a holistic approach.
By partnering with the right managed service, a fund can rely on resilient, secure systems that feature 24/7 operational support. That means trading opportunities will never be missed. They can have complete mobility and instant connectivity, allowing their traders to work from any place at any time. After all, markets don’t sleep, which means a communications platform can’t either.
And it means they have flexibility and scalability, allowing their systems to expand as the fund grows, and ensuring that every part of the operation has access to whatever functionality is needed.
We believe hedge funds need much more than a voice connectivity provider. And the reason for that is simple. For a hedge fund, talk most definitely isn’t cheap. It’s extremely valuable. Our job as a communications provider is to unlock that value.
Learn more about IPC’s industry-leading and award-winning portfolio of trading communications solutions at https://www.ipc.com/trading-communication-systems/unigy/.