Increasing competition in the hedge fund industry is encouraging funds to explore multi-asset, multi-strategy models that can return better risk-adjusted performance and can scale to meet the complexity this entails. Complications arise from trying to stitch together multiple legacy or in-house trading and risk management systems. Most are unable to produce consolidated views of book and portfolio performance as well as transparent assessments of risk across multiple asset classes.
We can help you get your fund from research and fundraising to growth much faster, with better visibility of risks and exposures. Beacon’s cross-asset portfolio and risk management platform gets your ideas to market in just four steps:
- Unify data, systems, and services
- Build models with comprehensive multi-asset coverage
- Enhance control and transparency of risk management
- Scale volume and performance with a cloud-native architecture
The result is accelerated time to market, increased adaptability to market events, and a system that can grow along with you.
Step 1: Unify data, systems, and services
Working with multi-asset and multi-strategy portfolios can be challenging without the necessary data. Beacon’s Market Data and Trade Ingestion Frameworks connect existing data into a central object database. A broad selection of tools and plugins make it easy to integrate with other data vendors and investment systems to build a single source of truth. High-throughput streaming services and elastic compute ensure data is ingested in real time and made available to other applications inside the platform, from pre-trade to reporting. Multiple desks, strategies, and pods work off the same data, creating consistent and optimal workflows.
Make more confident decisions
Beacon’s clients are using their newly unified data to empower more confident decision making. For example, one hedge fund client has connected Beacon to their order management system, real-time market data, and downstream reporting systems, to provide a centralized dashboard for monitoring risk and PnL drivers, enabling enhanced portfolio optimization. Another fund is ingesting trades from exchanges and 3rd-party data sources to reconcile and settle transactions faster and recalculate PnL on demand. And a third client integrated market data, trades, positions, and collateral and then worked with Beacon’s Professional Services team to build a tailored risk limit system for internal and external compliance requirements in just four months.
Step 2: Build models with comprehensive multi-asset coverage
Moving into new markets or adding a new investment team or manager means testing different valuation models and risk analytics against historical data. Beacon is designed to capture and manage data across multiple sectors, including equities, rates, credit, FX, commodities, and volatility markets. As both a research environment and production system, Beacon automatically and securely connects to production data, ready to use for new ideas. Beacon’s data and analytics are also directly accessible from Jupyter Notebooks, a common tool for data science research. You can quickly sketch out, test, and refine algorithms and trading or hedging strategies in Python. Integrated plotting tools facilitate analysis with quick data visualizations. All of this is readily shared with other members of the team and does not require advanced knowledge of the underlying cloud infrastructure,or front-end programming languages such as JavaScript, CSS or HTML.
Spin up new desks, strategies, or pods
Clients are using Beacon’s cross-asset platform and integrated developer toolset to accelerate their entry into new markets. They can quickly spin up a new trading desk or seamlessly manage and trade complex instruments and non-standard products that are not supported by existing systems. A leading energy trader wanted a system they could easily customize to better reflect and hedge their clients’ energy risks.
They built on top of Beacon’s standard out-of-the-box models and analytics to keep pace with changing energy markets and help their customers more rapidly adapt and hedge. Financial engineers at another client are using Beacon to build and deploy cloud-native models and analytics in a fraction of the time that would be required in spreadsheets or other legacy systems. Beacon’s unified data hydrates these models, giving analysts the ability to ask more questions and derive better insights on potential investments.
Step 3: Enhance control and transparency of risk management
Once you have spun up new desks or asset classes and your investment team has settled on their strategies, you need to integrate their trading strategy into the firm’s existing trading and risk management ecosystem. Black-box models from many vendor systems make it difficult to run risk across asset classes, add or change risk factors, or fully explain PnL and VaR changes, often due to inflexible data models. Using spreadsheets as a workaround can quickly spiral out of control. Beacon’s licensed source code gives you not only full visibility of all calculations, but also the ability to quickly adjust, backtest, and refine them. When research code is ready, it is simply restructured as a feature branch and pushed into the review and testing workflows. Beacon’s licensed source code gives you not only full visibility of all calculations and data dependencies, but also the ability to quickly extend and refine them. Model changes are governed and tracked with an integrated version control system. Paired with transparent source code, clients can customize risk factors to drill into the details and make sure there are no unexplained drivers of risk in their reports. This allows managers to match the reports output with their assumptions, delivering data they can trust.
Discover more effective hedging options
One Beacon client is using the platform to build and manage a “single source of truth” for models, like they have for data. The improved consistency and control across the company is significantly reducing the time to develop and deploy new or updated analytics and evaluate risk and hedging scenarios. Another client worked with Beacon’s Professional Services team and Beacon-Certified third-party consultants, integrating the platform into their existing data workflow to improve handling of cross-market effects, dependencies, and complex pricing formulas. By augmenting their existing systems with Beacon, they have added dynamic intraday PnL and risk to their toolset, and gained a better awareness of their portfolio exposure and risk-adjusted returns.
Step 4: Scale performance with a cloud-native architecture
As funds grow and strategies become more complex, you need to process large datasets and run all of your risk scenarios, requiring a significant amount of compute and storage. Cloud infrastructure is perfect for this, providing compute pools that parallelize calculations and scale horizontally to support your growth as well as increased volatility or trade volumes. However, the setup and learning process can be quite daunting. This is another integrated part of Beacon, abstracting the infrastructure, process, and control tools for multiple cloud providers. Beacon’s compute grid gives you ready access to the resources you need. A job scheduler is directly integrated with the development environment and cloud infrastructure for seamless and secure workflow automation. Dashboards provide full control and transparency, simplifying operations and reducing administrative costs.
Manage increasing volumes and adapt faster to market changes
With growth comes increased risk, making real-time management and market responsiveness even more critical. Equipped with Beacon’s abstracted cloud architecture, clients are able to scale their processing capacity to handle higher trade volumes, prepare hedges for a much larger set of scenarios, and accelerate responsiveness and time to value. One client is accelerating their FX trading and analytics capabilities, replacing hundreds of error-prone spreadsheets with Beacon and reducing book revaluation time from an hour and a half to less than 15 minutes. Another client is scaling and centralizing risk management for equity derivatives, incorporating in-house libraries for volatility handling, including deriving vol surfaces off listed products across multiple exchanges. They are leveraging Beacon’s dashboards and app development tools to provide traders and quants with live, user-customizable displays, aggregating positions of 10s of thousands of instruments.
Accelerate Your Time to Market
Sophisticated algorithms and analytics aren’t worth much unless you can get them in the hands of the people who turn models into money. With broad instrument coverage, scalable cloud architecture, and an integrated development environment, Beacon includes everything you need to streamline the path from research to market. Beacon’s inclusive platform provides applications, data visualizations, business intelligence tools, and the full underlying cloud environment and source code to let you focus on your areas of expertise and competitive edge, not redoing infrastructure and basic functionality. Build and test research signals faster against whatever data you need, and capitalize on market opportunities across all geographies and asset classes through a single extensible platform in just four steps.
