Linedata has taken a short cut into the risk market through a global partnership with Paris based Riskdata, a provider of risk solutions for asset managers and institutional investors.
The companies signed the partnership last month and Linedata is working to embed Riskdata’s risk analytics functionality into its Beauchamp portfolio management system. The company has set up client test cases of the integrated solution with a view to having a production version of the software ready late this year or early next.
Linedata will initially offer a risk solution for hedge funds – its non-exclusive partnership with Riskdata covers only Beauchamp in the first instance and not the Linedata Longview institutional solution or Trader+ platform introduced earlier this year – but it says the hedge fund solution is in accord with regulatory guidance for UCITS funds and suggests it may extend the partnership to cover client groups using the Longview platform.
For hedge funds, Linedata will offer two risk packages: an end of day risk reporting service including predefined reports and covering value at risk, exposure and stress testing; and an interactive risk analysis solution displaying risk allocation by strategy and other position attributes, as well as ‘what if’ simulation for pre-trade risk evaluation in near real time.
According to Ed Gouldstone, head of hedge fund products strategy at Linedata, “By integrating Riskdata into our Beauchamp technology framework, we are able to offer our customers cost effective, fully integrated risk, without the burden of taking on the complex integrations and data management requirements of a multi-asset risk solution.”
Linedata’s partnership with Riskdata follows increasing client requests for guidance on risk. “In the past, we have helped our users interface to other systems, but we decided we could do better than help them send a portfolio to a third party and get a report back. Embedding risk into our product means clients can show how they monitor and manage risk better,” adds Gouldstone.
The company looked at several risk providers before partnering Riskdata on the strength of its functionality and asset coverage from equities to complex derivatives. Linedata users will continue to use the Beauchamp application, but will have access to Riskdata’s analytics functionality and pre-calculated data service.
The two integrated solutions can be implemented in-house by clients or hosted by Linedata, with the company hoping it will convert 10 to 15 of its 200 hedge fund clients to the risk enabled version of Beauchamp over the next year.
Gouldstone says the Riskdata partnership changes Linedata’s competitive position and could put it on the path of clients that are heavily invested in derivatives and are likely to be using solutions such as Sungard Front Arena or Misys’ Sophis. Still more, he expects further additions to the Beauchamp platform following the addition of Riskdata and, previously, a presentation ready reporting tool from Varden Technologies.
“Hedge fund managers want to be more like asset managers that focus on performance management and attribution. We offer trading, portfolio management, compliance and now risk, so our next partner could be in performance management,” Gouldstone concludes.