By Warren Finkel, Omega’s IT strategy expert for financial services and wealth management customers
Facilitating needs from data security to seamless trading execution, technology is a crucial component of success in the hedge fund industry. And having a reliable managed services provider (MSP) managing and monitoring that technology is essential. However, not all MSPs are created equal, especially when it comes to handling the unique needs of today’s hedge funds and asset managers. Here are seven qualities to look for when selecting an MSP for hedge funds.
Hedge funds operate in a niche industry with distinct compliance requirements, trading applications, and cybersecurity threats. For example, critical applications such as order management systems (OMS) and portfolio management systems (PMS) must be deployed and secured to maximize speed and execution. A qualified MSP should have extensive experience working with hedge funds and financial services firms, ensuring they understand the regulatory environment and technology application and infrastructure demands.
Cyber threats are a top concern for hedge funds due to the high-value transactions they manage. Sophisticated phishing, ransomware and zero-day attacks can disrupt trading operations and cripple a firm’s financial and operational integrity. A hedge fund MSP should be security-forward and offer advanced security measures, including:
By implementing these protections, an MSP can help safeguard your firm from cyberattacks and data breaches.
The hedge fund industry is governed by stringent regulations from the likes of the SEC and FINRA. But keeping pace with changing hedge fund compliance requirements is not an easy feat for those tasked with governance, risk and compliance (GRC) responsibilities. Your MSP should stay up to date with compliance requirements and assist in ensuring your firm meets evolving industry standards with required controls such as data retention policies, proactive threat hunting and disaster recovery planning.
In addition to implementing controls, many experienced MSPs can help hedge funds manage the compliance process, using a variety of data discovery and IT assessment tools as well as ongoing vCISO consulting, to help firms identify potential compliance gaps and work towards future compliance.
Hedge funds rely on real-time market data, algorithmic trading, and 24×7 access to financial platforms. Their ideal MSP should offer a strong Service Level Agreement (SLA) with high uptime guarantees (ideally 99.99% or higher). This ensures minimal downtime, allowing traders and analysts to operate without disruption.
As your hedge fund grows, your technology needs will evolve. Your MSP should provide scalable solutions that adapt to business expansion, including:
A flexible MSP will ensure that your technology infrastructure aligns with your firm’s growth trajectory.
Reactive IT support isn’t enough in the hedge fund space. Your MSP should offer 24×7 monitoring and proactive maintenance to prevent issues before they impact your operations. This includes:
For times when IT issues do arise, hedge funds need instant access to qualified technicians to troubleshoot problems. Your MSP should offer varying levels of round-the-clock IT support to ensure complete coverage and be willing to share transparent statistics on call wait times and customer satisfaction – which are both important gauges to measure the quality of the customer experience.
Financial services firms, including hedge funds, are key targets for hackers, and even with preventive security controls in place, it’s not uncommon for firms to fall victim to advanced phishing scams or ransomware attacks. That’s why it’s imperative that hedge funds maintain current incident response plans and work with trusted MSPs who can take immediate action in the event of a cyber incident.
An MSP with its own Security Operations Center (SOC) can respond rapidly to threats when they’re detected, facilitating quick containment. SOC teams who are already familiar with your security architecture can also more easily lead forensic investigations to determine where a breach started and why. Access to these types of expert security analysts through your existing MSP can speed up recovery efforts and limit the overall operational and financial impact to your business.
Selecting the right MSP for your hedge fund is a critical decision that impacts security, performance, and regulatory compliance. By ensuring your provider meets these seven key qualities, you can safeguard your operations, optimize efficiency, and position your hedge fund for long-term success.
If you’re looking for an MSP with deep expertise in the hedge fund industry, Omega Systems provides tailored solutions designed for financial firms. Contact us today to learn how we can help enhance your IT infrastructure.
ABOUT THE AUTHORWarren Finkel, Managing Director of Omega’s Northeast region, brings decades of experience in IT strategy and tailored solutions for customers in family offices, RIAs, hedge funds, and other financial services sectors. Read Warren Finkel’s full executive profile here.
Connect with Warren on LinkedIn.