July 18, 2011

MIK Fund Solutions said the software developer released a comprehensive equity finance tracking and optimization system for hedge funds and asset managers.

The application is meant to enable asset managers to reduce and optimize borrow costs, improve reporting and attribution of their financing costs, and improve the overall decision making process around equity financing activities.

By deploying the application, MIK clients gain a sophisticated view into all of their financing interactions with their execution brokers, thereby creating a powerful analytic tool for managers to monitor, measure, and evaluate financing activities across a customized array of categories, defined and chosen by the fund.

As hedge funds and asset managers need to continually seek alpha, there is a need to lower and optimize financing costs that have a direct impact on fund returns, according to the company’s release. Through equity finance data capture, finance and borrow information across multiple periods is automatically and easily retrieved. Such data and analysis is essential to financing decision process, and is integral in assessing current and future position allocations.

"Basic financing data collection and analysis using MS Excel is no longer sufficient for hedge funds or asset managers in today’s complex trading environments,” comments Marshall Saffer, COO of MIKFS, in the release. “Rather, firms now demand, as next stage thinking, the ability to use data in a comprehensive and integrated way, to ultimately lower costs around financing and reduce the impact of financing on fund performance.”

One of the key features is the ability to process a landslide of information contained in the various stock loan data sets from the street. The fully customizable tool ties together all related securities indications from the source files automatically as they become available, and with minimal market data costs incurred by the client using market standard symbology tools available to the general marketplace.

According to Saffer, MIK’s Equity Finance application also enables firms to meet basic oversight requirements and provides managers with a view into the entire range of the trading and financing relationships in which they engage. “It makes the relationship between firms and their brokers more transparent and provides a means to engage brokers based on concrete analysis.”

Hedge funds have the ability to view financing data across brokers, regions, asset types, portfolio managers, traders, etc., which enables managers to have critical information regarding financing activity, providing them with a tool to act on this information. The system validates the accuracy of borrow charges, automates the recording and tracking of stock loan locates and pre-borrows, and identifies of lower borrow rates and suggests optimization. The application provides detailed reporting, trend charting, alerts and other tangible measures to assist in the client’s day-to -day operations.

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Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in ...