Bill Gourlay, who previously ran the fund management strategy group at RBC in London, arrived at investment management industry technology consultants Idea Group as CEO in December 2013. The speed with which they have created the GAIA standards to automate subscriptions and redemptions is a reminder that few were better qualified to fix that obvious and longstanding source of cost and complaints in the hedge fund industry.
On 28 September last year the Global Alternative Investment Automation initiative (GAIA) published a new set of messaging structures for the alternative investment management industry. The ambition of GAIA, set up in August 2014 by a group of seven central securities depositaries (CSDs) and fund administrators, is to address and solve a complaint of longstanding among the private banks that distribute hedge funds and the hedge administrators that process the orders of those distributors.
Unlike the mutual fund industry, where automated order routing networks (Calastone, FundSettle and Vestima) and settlement services (Clearstream and Euroclear) now intermediate a growing proportion of the order flow, the opening of investor accounts and the processing of subscriptions and redemptions in the hedge fund industry are still characterised by extensive use of faxes and repeated manual re-keying of data. It is one reason why hedge fund administration sustains far more providers and proportionately more jobs per million dollars of assets under management than its mutual fund counterpart.
It was to address this gap in services that Clearstream - owners of the Vestima order routing network - acquired Citco Global Securities Services, the Cork-based hedge fund order processing business of Citco...