A post relating to this item from Finextra:
31 December, 2008
Hedge fund IT spending to plummet - Celent
As the world's largest financial institutions are whipsawed by an unparalleled series of shocks and traumas, the hedge fund industry has taken its own beating.
To be honest, I remain skeptical about the necessity to invest heavily into Risk Management technology. It seems to me that the issue is not in software or hardware but in general assumptions and practices. Let’s take pricing and valuation - server farms
with thousands of servers running Monte-Carlo and stress tests for structured products did not help with preventing the mortgage disaster. Should the hedge funds spend scarce available resources to implement similar systems at this very moment?
On the other hand, it is encouraging to discover that Celent believes that hedge funds will work on improving their Smart Order Routers and Algorithmic trading. It actually makes sense. Better execution represents not only cost savings right now, but a positive
technology improvement that will pay off long term. I hope Celent is right in this assumption.