Trader productivity is often the top concern for most buy-side institutions given the high costs of operating a professional trading desk. Effective collaboration and communication within a firm are key requirements for ensuring worker productivity in general and trader productivity in particular.
This has forced many buy-side firms to rethink their internal communications infrastructure and networks. Let’s take the example of a typical mid-sized hedge fund. It is likely to be composed of portfolio managers, traders, strategists, analysts, quants, economists, software developers and risk managers. All of them need to be communicating seamlessly with one another to ensure the successful execution of the firm’s trading strategies. What are some of the challenges to achieving what appears to be seemingly simple?
First, the personnel at these hedge funds are often part of different teams and are geographically dispersed. They need to be able to securely communicate information across the firm’s network. The ability to successfully share information depends on the availability of a wide variety of reliable and secure connectivity options to the firm’s locations around the globe.
Second, mission-critical, trade lifecycle applications must be available and managed on a network-wide basis.
Third, bandwidth demands for trade lifecycle applications, market data and corporate applications continue to rise dramatically and need to be managed effectively.
Last, it is not economical for a mid-sized hedge fund to get leased lines to link their various offices and create a corporate wide area network (WAN). Designing a corporate WAN internally takes a firm’s focus away from its core business of alpha generation.
A Managed Virtual Private Network (VPN) helps mid-sized buy-side firms to effectively meet these challenges as it:
- Is cost-efficient, provides Class of Service (CoS) flexibility and frees up IT resources
- Is a managed service that allows the firm to focus on its core business
- Reliably and securely connects portfolio managers, traders, quants, analysts and other personnel with one another no matter where they are located
- Prioritizes traffic to ensure performance of both corporate and trade lifecycle applications – Offers a flexible and scalable platform to converge voice, data and video
Hedge funds and other buy-side firms must look for the following attributes in a Managed VPN service provider:
- Global reach that offer connections into virtually all financial centers
- Ability to provide a flexible and tailored technical and commercial solution to meet business requirements
- Capital markets focus and expertise – built exclusively for the capital markets and tailored to buy-side operational needs
- Offers competitive service-level-agreements under a single global master service agreement
- Investing in the right type of managed VPN service will transform collaboration and communication inside the buy-side, which in turn will streamline all the processes that lead up to the execution of a successful investment thesis.