Data sharing is a sensitive topic for hedge funds. Investment managers spend years accumulating the experience, knowledge and processes that give them their competitive advantage, and protecting that intellectual property is of critical importance to them.
Concealing trade ideas from competing hedge funds is one area of concern, but events like those surrounding GameStop (GSE) in 2021 demonstrate the potentially crippling consequences when exposures are revealed to the wider public. Many hedge funds suffered financial losses, but some like Melvin Capital, Light Street Capital and White Square Capital paid the ultimate price and had to close their operations.
Digital security is therefore a critical factor when making the decision to integrate third party software and applications into a hedge fund’s operational workflow. The financial benefits can be compelling, but never at the cost of security.
Treasury management solutions are one such example. Only a handful of the largest hedge funds have the financial resources and knowledge required to build the technology necessary for managing an efficient treasury function. The remaining majority either integrate into third party treasury technology solutions like Kayenta, or muddle through with manual processes that are likely to leave meaningful cost benefits on the table.
The transparency and insights a treasury technology solution delivers can save hedge funds multiple times the cost of the technology, both in dollar value and in terms of time required from their team. Treasury specialists like Kayenta provide understanding and optimization of functions including cash and liquidity management, counterparty exposure limits, securities lending benchmarking, FX hedging, financing wallet and many more, but in order to perform this analysis the technology needs visibility on all financing aspects of the portfolio, and this is where the risk lies.
So, what is the safest solution? Can data be protected in the Cloud?
The Security Strength of The Cloud
Kayenta’s treasury technology operates in the Cloud for the reliability, scalability, mobility, and, of course, security that it provides. Hosting can be through any known Cloud platform, but the default is Microsoft Azure to take advantage of the wide array of configurable security tools and capabilities that Microsoft’s 3,500+ global cybersecurity experts provide.
Azure’s defense-in-depth design is built from the ground up with multiple layers of defense to protect data, applications, virtual machines, networks, perimeters and related policies. It adheres to some of the most rigorous security and compliance standards in the world, including ISO 27001, ISO 27018, SOC 1, SOC 2, SOC3, FedRAMP, HITRUST, MTCS, IRAP, and ENS.
Everything starts with identity and access control. Kayenta’s treasury management software is built on hub and spoke architecture that maintains each hedge fund’s data and user interface in a segregated environment. Access is password protected with multi-factor authentication, and dedicated administrative accounts manage permissions. Extensive auditing capabilities record the activity within each hedge fund’s environment, enabling swift reaction to thwart potential threats and reveal crucial pieces of information to investigate attacks.
Defense mechanisms protect the environments against DDoS, ransomware and other potentially harmful cyber-attacks, while Microsoft apply the cyber intelligence they have collected across their services with industry data to block known attack patterns.
Data is encrypted at rest and in transit, and the Azure Security Centre uses machine learning to continuously assess security and vulnerability levels to proactively look for and alert on potential threats. Microsoft’s granular network firewall control provides around-the-clock monitoring for unusual traffic, protecting against malicious attacks such as SQL injection and cross-site scripting with automatic network attack mitigation.
The integrated support services of Cloud platforms like Microsoft assist and activate the tools that are essential for the secure handling of sensitive data. It is a robust architecture that outperforms most on-premise security measures, and offers unified security management and threat protection at a fraction of the cost.
We stand by our product for its sound security and data integrity, fast delivery speed and flexibility, and dependable frequency of system updates. Schedule a demo to learn how Kayenta’s technology will transform your hedge fund’s treasury function.