Hedge in the cloud, funds outsourcing computing power

LONDON: Tucked into the attic of a Georgian building in London’s West End, seven people run a US$ 200 million hedge fund following artificial intelligence formulas. But the supercomputers that process their complex algorithms are nowhere to be seen.

While most established hedge funds keep their trading systems at close quarters, Piquant Technologies outsources all its IT to third parties via the cloud, where multiple computing resources are shared by multiple and often unrelated users.

Moving data off- site to cloud providers may be physically safer than storing servers in an office in Mayfair and may even provide security in anonymity.

Piquant co-founders James Holloway, 32, and Iain Buchanan, 36, say putting their trading and back office systems on external platforms halves hardware costs and means one less person to hire for maintenance.

“Do not burgle Piquant - it’s not worth it,” said Holloway, the fund’s Chief Investment Officer. “In our office we have really no hardware except for a mouse, a keyboard and a screen.”

But risks lurk if data is not properly protected. Technology provider RFA, which has 576 hedge fund clients globally, said 20 per cent - or 115 - of them funds moved some operations to the cloud last year.

The likes of Amazon, Google and Microsoft are winning new customers - asset managers who gain access to the latest supercomputers without having to buy any hardware, helping them cut costs.

Regulators are trying to keep up, raising concerns about how well the risks are monitored. — Reuters