As the number of reported global cases of COVID-19 exceeds three million, we’re seeing various actions taken around the world in an attempt to curb the contagion and prevent a global economic slump. Central Banks have made emergency cuts to interest rates, governments have closed borders, and market volatility has spiked drastically due to sharp falls in global stocks.
According to Hedgeweek, the hedge fund industry is encountering high trading volumes as many funds capitalize on the market turbulence and subsequent price movements. With market sentiment continuing to spiral, some asset managers, especially money market mutual funds and fixed income funds investing in riskier debt assets, have found themselves under pressure from the drastic increase in redemptions. Here in Asia, while some of the biggest Asia hedge funds have been hit with significant asset outflows in March, we’ve also conversely seen solid start-up activity, with new fund launches drawing investor interest despite the outbreak.
Transitioning to a Work-From-Home Structure
In the face of the pandemic, the industry is grappling with the task of maintaining business continuity whilst managing trading activity at a higher capacity.
Some of our larger clients, particularly on the sell side, have opted for split shifts to physically segregate staff, while most hedge funds, asset managers, and banks have deployed more stringent work-from-home practices. In March, the New York Stock Exchange made the unprecedented decision to close its offices during market hours for the first time in history.
Managers shifting staff off-site have needed to take planning and preparedness measures to ensure minimal disruption to their operations. The firms that put the time in to performing connectivity testing and work-from-home preparations have made the smoothest transition to wide-scale remote work. At SS&C Eze, we test our business continuity plan and pandemic response annually and conducted additional infrastructure tests and work-from-home planning in our major locations to ensure we were ready to run our operations remotely. In Hong Kong, where I’m based, due to the ongoing disruption caused by the protests, as well as our regular preparation for typhoon season, we were able to move very quickly and seamlessly across our APAC locations despite the sudden onset of the disease.
Managing internal communications effectively is proving imperative in streamlining disjointed operations, and as such, we’re seeing an increased use of instant messaging platforms and video conferencing in place of traditional face-to-face meetings.
The Value of Cloud in Remote Trading Operations
While things have worsened in Europe and the US in recent months, we have been navigating COVID-19 here in the Asia-Pacific region since January. What we’ve seen from clients working remotely is an increased demand for, and dependence on, cloud technology. When operations are in the cloud, traders only need a laptop and a reliable internet connection to trade from home.
Cloud adoption has increased significantly across our client base and the industry over the past few years. The number of firms deploying Eze Investment Suite using public or private cloud has more than doubled since 2018. With Eze Mobile for iPad and iPhone, Eze Investment Suite clients have the added benefit of entering trades for immediate execution on-the-go. We’ve also seen rapid growth in Eze Eclipse, our native cloud platform, which now has more than 110 firms signed on, and provides unparalleled mobility across any internet device. This dramatic shift to cloud in recent years has enabled many firms to continue running their businesses remotely during the current crisis with minimal latency to critical functions.
When it comes to security, managers should be asking their vendors about the protocols they have in place. Do they require multi-factor authentication? Have they subjected their security measures to external audit? Have they earned any of the gold-standard certifications, such as ISO 27001?
With the right platform, whether it’s a true born-in-the-cloud platform or cloud-deployed and hosted, users should have the same experience with easy access to their critical tools and processes, whether they’re at home or in the office. At Eze, we’ve been able to help clients transition seamlessly to remote work even as we were transitioning ourselves. Traders needed to be focused on the markets, and not their IT, during this period of unprecedented volatility.
Scalability and speed in the front office is even more critical when considering this volatility. Our decades long market leadership in the front-office has ensured that our cloud solutions are built and designed to scale capacity to support the most active traders during the most volatile times. Rich Billig, COO at Atlas Impact Partners, commended SS&C Eze for Eclipse's reliability, "Their system has been highly reliable during this most recent crisis, allowing us to continue our fund operations with confidence."
What Can We Expect for the Future?
While the Coronavirus pandemic is truly a black swan event, it reminds us of the importance of being prepared for smaller conceivable events that have the power to disrupt operations, whether it’s a natural disaster, extreme weather, or even war. Efficient disaster planning, considering lessons learned, will prove key in helping firms maintain business continuity in the future.
There are ongoing conversations about how the Coronavirus outbreak might change the way the industry interacts in a post-pandemic world. The digitization of the workplace has forced managers to think about how global teams can work and collaborate more effectively day-to-day. People who travel frequently, who work from home often, or who work in satellite offices may find themselves benefitting from the lessons learned and new practices adopted during this uncertain and trying time.
Historically, Asia-Pacific has not moved as quickly to adopt many of the remote work policies seen across the globe. This pandemic may very well change the working culture and attitudes of the region, which will ultimately require a revaluation of standard business practices that we are accustomed to.