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OpHedge Migrates Clients on to GoldenSource Security Master

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New York based hedge fund administration provider OpHedge Investment Services has begun to migrate its clients on to the GoldenSource security master solution, and plans to start implementation of the vendor’s positions repository later this year. The firm signed up for the two components of GoldenSource’s enterprise data management solution last March (Reference Data Review, March 2006). OpHedge is one of GoldenSource’s first two “powered by” clients – running lines of business on the vendor’s platform. The other is HSBC Securities Services (HSBC signed a global implementation deal with GoldenSource in September 2005). According to Jim DeCicco, North America vice president of product services at GoldenSource, such service providers represent a “fast growing” piece of its business.

OpHedge has so far brought one major client on to the GoldenSource security master – it went live in December – and the system is taking vendor feeds from Reuters and Bloomberg to support this client’s operations. The firm will focus for the next two to three months on converting the remainder of its 10 clients over. According to Jeff Li, its chief technology officer, OpHedge will be reviewing the GoldenSource transactions/holdings module within five to six months.

OpHedge was formed in April 2005, under CEO Tom Chang, formerly a managing director and head of sales in Asia for Goldman Sachs. Oak Hill Platinum Partners and Soros Fund Management were strategic investors in OpHedge, and its first two clients.

The hedge fund administrator made the decision to invest in a security master shortly after its creation. Prior to its GoldenSource implementation OpHedge’s security masters resided in different trade processing and GL systems, and its aim was to centralise them to provide a clean data feed to downstream systems. “The security master is very fundamental to our business,” Li says: OpHedge provides middle and back office operations services for hedge funds, including trade capturing, trade processing, OTC trade management, daily NAV production, custom daily P&Ls, collateral management, corporate actions, counterparty reconciliations, treasury activities and the generation of customized management reports.

The firm reviewed several security master vendors. Its selection was made on the basis of a number of criteria. The GoldenSource technical architecture is compatible with OpHedge’s internal architecture – in particular its use of Oracle and JMS messaging for communication. Li also cites the strength of the vendor’s professional services and post-sales support as reasons for choosing GoldenSource.

In addition, “its coverage of different asset classes is pretty good”, he says – important for OpHedge since its hedge fund clients deal with more than 60 different asset class and product types, so it needs a data model with sufficient breadth to handle complex instruments. “The product itself is customisable,” he adds. “As a service provider to hedge funds, which are highly specialized businesses, we require customized solutions. We need to consolidate all our clients’ security masters on one platform, but still be able to segregate each client’s data in the database, and to be able to take in feeds from many different data vendors.”

The functionality in the GoldenSource solution for hierarchy management, multiple golden copies and securities of interest is also very important for OpHedge, Li says. “For different securities, clients want different sources, and we have taken advantage of the hierarchy capability to accommodate this, based on clients’ own pricing policies, their requirements and the data licensing agreements they have. We use the securities of interest functionality to control the data sets for each client.” Li believes that “possibly with some customised development, the GoldenSource security master will be able to take in data from any source a client might require”.

Going forward, OpHedge will focus on automating the data feed to all downstream systems, building a group for data cleansing in the centralised platform and creating better handling of corporate actions processing, Li says. We are looking forward to reviewing GoldenSource’s positions repository capability. This will allow us to centralise clients’ holdings and transactional information which, gathered together with the security master information, will enable us to generate reports more efficiently – P&L reports, transaction related reports, et cetera.” According to DeCicco, implementing the positions module will enable OpHedge to tie in the indicative data from the security master with its positions in order to carry out risk assessment and ascertain what risk mitigation needs to be undertaken.

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