Advanced Application Enables Hedge Fund Operations Teams To Generate Tangible Cost Savings
MIK Fund Solutions, a leading provider of software solutions for hedge funds, today announced the release of new treasury capabilities as part of its equity finance product suite. The new functionality enables the back office to deliver tangible and measurable cost savings in cash, leverage, and foreign currency exposure management.
MIK has previously announced a comprehensive and integrated equity finance tracking and optimization system for hedge funds and asset managers. The application is designed so managers have the opportunity to improve reporting and attribution of their financing costs, and improve the overall decision making process around equity financing activities.
The treasury functionality announced today complements the already robust equity finance offering. Using MIK, firms can now determine precisely how much their short positions and cash balances cost based on current rates. From this analysis, firms can migrate positions and balances to counterparties offering optimal financing and margin rates in the same securities and currencies. The net result is full transparency and better treasury management. Capturing these optimizations provides for reporting on the savings which accrue as a function of lower interest and leverage rates, directly impacting alpha. Over time, these savings can be substantial.
Also included in the Treasury module is the Foreign Currency Hedging tool which provides for current calculations of open FX exposure at the portfolio and currency level. The application then compares these exposures with cash and currency hedge positions and calculates open net exposures. This allows the user to view current hedging requirements and transact based on predefined mandates of acceptable net FX exposure as defined by each client.
The MIK approach allows managers to analyze broker rates and availability from the latest street data and measure these against current holdings – optimizing both the financing, borrowing and leverage decisions. The MIK system seamlessly integrates with brokers, order management and accounting systems.
Said Marshall Saffer, Chief Operating Officer: "We have consistently used data as a means to increase alpha. For equity finance this meant the ability to use data in a comprehensive and integrated way. With Treasury Optimization we now enhance this capability to leverage Margin and Financing rates in real time as well as FX exposure, and thereby to reduce cost. So now, the relationships with brokers are driven as much by the clients’ understanding of the ‘state of play’ between brokers as they are by the services each separate broker delivers. It is the first time in an automated and effective fashion the back office can operate to deliver a specific, measurable cost capture on a consistent basis.”