Compliance departments across Wall Street already had their hands full for the foreseeable future thanks to the Dodd-Frank law and now they have something else to deal with. With the sudden popularity of Apple Inc.'s iPad reaching a fever pitch across the industry - particularly inside hedge funds - the pressure on information technology departments has never been greater. They're simply managing a greater number of mobile devices than ever before and this puts an unprecedented burden on security and compliance.
In an interview with Advanced Trading, Tabb Group Analyst Kevin McPartland breaks down what this means for IT spending, how the iPad shines for certain trading strategies, and why it's not quite ready to supplant the laptop.
How are exactly are hedge funds and traders using iPads?
Kevin McPartland, Tabb Group: Ever since the BlackBerry allowed you to place a trade, there's been this thought that people would do their trading on their mobile devices. I'm not sure that's really the case in the institutional market with the exception of maybe some day traders.
It's more about easily keeping in touch with the market. If you're a hedge fund manager, it's about watching the returns on your portfolio, monitoring risk, and monitoring exposure. So the ability to just flip on, look and then continue about your day is a huge advantage. We just got them here at Tabb Group and that's been the best thing for me.
Are iPads on their way to replacing laptops on Wall Street?
McPartland: It depends on the user. For analysts, it's good if you're at a conference or even if you are travelling throughout the day to a bunch of meetings. But to do my job with spreadsheets and Power Point slides, the tablet is not quite there. It's not the best interface. Now from a sales and management perspective I could see a lot of benefits. In those roles it's more about consuming information to make decisions and that's where the iPad is just great.
With its reliance on WiFi will we ever see an iPad trading app or are the latency issues too much to overcome?
McPartland: It depends on the strategy. Not all hedge funds use latency sensitive strategies. I have a brokerage app that allows me to trade on my iPad, for example. But it's not like I'm sitting there trading all day. But you can. It can be done. It exists today. I still think there are more efficient ways for an institutional trader to trade rather than to sit there and tap away. If you were really going to be actively trading, I think you would still open up your laptop.
What impact will an additional mobile device have on a firm's compliance department?
McPartland: This just adds onto the existing story with so many new methods of communicating and connected devices. Think about your own house and how many devices you had five years ago. We each probably had a computer that connected to our wireless network at home. Now you probably have seven or eight devices in your house between cell phones, laptops, iPads, and the desktop computer. Firms are dealing with that on a much bigger scale.
On top of that are the compliance requirements to capture every bit of communication. It's going to be a tough one and it's going to be a slow rollout. What will this mean for IT spending?
McPartland: They're going to be allocating more to compliance because of so much regulatory uncertainty. It's all the Dodd-Frank stuff, all the changes in the equity market structure. There's inevitably going to be much more reporting and greater demands for transparency from regulators and this will all be a part of it.
Editor's Note: A more complete version of this interview will appear in the March digital issue of Advanced Trading.
As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio