Click here for a printer friendly version of this page

Mail this article to a friend

Hedge Fund Start-Ups Select Paladyne Systems Platform

NEW YORK—Hedge funds have traditionally been considered slow in adopting enterprise data management strategies, but two start-ups are challenging the norm, making one of their first purchases a data management platform from New York-headquartered software provider Paladyne Systems, officials tell Inside Reference Data.

The new Paladyne clients are US-based multi-strategy start-up funds with assets under management of between $500 million and $700 million. They were established by experienced professionals, who realized the data problem was worth solving as early as possible, says chief executive officer of New York-based Paladyne Systems, Sameer Shalaby.

Shalaby says everybody thinks it is unusual for start-up funds to be buying the reference data management products first. "It's not the norm, but very appropriate," he says.

The hedge-fund focused software provider typically sees more interest in reference data management products from larger funds. "The leaders in the space are starting to realize a real need for a centralized data management function. The smaller guys haven't quite figured that out. They typically rely on prime brokers with a combination of spreadsheets to run their business," says Shalaby.

Connecticut-based Denise Valentine, senior analyst at Aite Group, is not surprised to see smaller hedge funds buying data management software. "A security master is pretty much core to the business. What is new is that there are some lower-cost solutions available with lower implementation costs," she says, which helps create a more level playing field.

Shalaby says the larger funds are recognizing that the longer you wait, the more data issues you have down the line. Paladyne in particular is seeing huge interest in its Security Master and Price Master products from larger funds, and the company, which opened its first office in Europe in London last summer, has recently recruited around six more staff to its London team. Towards the end of the year it is also likely to set up an office in Singapore, Tokyo or Hong Kong. "In Asia, the hedge fund market is growing pretty rapidly and there are a lot of start-ups and spinouts," says Shalaby.

Meanwhile, turbulent market conditions have led to a changed sentiment in the market. But Shalaby says the IT spend continues to be fine. "They still might have the same budget, but some may want to defer a month. The pace is a little bit slower than it was in the last six months," he says.

Tine Thoresen