Build vs buy conundrum – a Neovest case study

Thibault Denos from Neovest APAC shares some insights into the classic “build vs buy” conundrum. In the realm of buy-side trading systems, the question of build versus buy is a constant debate.

“We are seeing a more hybrid approach with hedge fund clients combining their proprietary tools with vendor technology,” says Thibault Denos. “Clients find this increasingly attractive as it leverages the strengths of both in-house and third-party solutions – leading to more tailored and effective solutions.”

Hybrid models come in various shapes and forms and it is important for COOs and CTOs to understand and know what is possible with today’s technology. One notable example involves a project by Neovest for a global multi-strategy hedge fund with over US$100 billion in AUM. The fund was looking for a trading user interface for their futures traders. The fund initially opted to develop its own trading system. They had already completed a proprietary order routing engine that connected to their execution brokers through FIX. Their order routing engine also included their own algorithmic trading strategies.

However, as they began developing a user interface for their futures traders, the list of customised demands grew quickly, including features like custom tickets, shortcut buttons, user defaults and real-time data. Despite seeming straightforward, these features were resource-intensive and time-consuming to develop and implement. Realising the prohibitive cost and time required to develop and maintain an in-house user interface, the fund turned to Neovest for a state-of-the-art solution. Neovest was able to quickly connect their user interface to the fund’s proprietary order-routing engine. The Neovest FIX connectivity team created a solution to allow traders to select the fund’s custom algorithmic trading strategies directly from their Neovest screens. For the client, it allowed them to quickly deliver a front-end to their traders.

For Neovest, this was a new way to help serve clients. As a technology service provider, it generally focuses on connecting its clients’ traders with third-party brokers for execution services. In this instance, it bridged a critical gap between the client’s traders and their internal order routing/execution technology enabling them to direct their orders in a more tailored and effective manner. “I can foresee other major hedge funds being interested in similar projects,” says Thibault Denos. “We understand that our clients’ ability to internalise their order routing capabilities is valuable. Neovest’s offering gives funds full control over their broker selection process and allows them to build their own execution algorithms.”

For more information on how you can partner with the Neovest team, please visit www.neovest.com