Concept Capital Unveils Multi-Prime Service Platform

Concept Capital is launching a multi-prime service platform for hedge funds that are going to face significant changes in their risk management and investor reporting requirements.

The new platform, known as ConceptOne, is packaging together integrated execution and order management system capabilities, along with real-time risk management and portfolio analysis, supporting global multi-asset, multi-currency investment strategies, in one place, said Michael Rosen managing directors at Concept Capital, an institutional broker, in an interview with Advanced Trading. The system also provides fund administration services, including independent portfolio-verification.

With the industry at the cross roads, hedge funds are going to face many more tests to garner an institutional allocation, predicted Rosen. At the same time, their ability to spend money and their budget has decreased because performance is down and redemptions are up.

ConceptOne was launched yesterday in partnership with several industry technology providers. Though Rosen was not able to disclose all the partners, he said two of the partners are Nirvana Solutions and Risk Resources LLC. According to its Web site, Concept Capital utilizes Advent Geneva as its fund administration platform and accounting engine.

With everything that has gone on in the hedge fund industry, Rosen said he expects that hedge funds will place a significant emphasis on risk management and the supporting documentation showing they’re doing their job as a fiduciary. “I think risk has always been done on a lag basis and we believe that portfolio managers, to effectively run their business, are going to need real-time risk available to them because the market is changing in such a dramatic fashion,” said Rosen in the interview. Traditional measures such as VaR (Value-at-Risk) are less effective, while rapid changes in liquidity and volatility are much more helpful in this type of environment, he said. To mitigate counterparty risk, the system provides a real-time aggregated view of risk and P&L, across multiple custodial accounts, the release noted.

The firm is offering ConceptOne as a managed services platform, which can be offered at a lower cost than many hedge fund managers can provide the services for themselves internally. The platform will be provided on an ASP (application service provider) or hosted basis with a monthly minimum fee and a percentage of assets model. “We’ve pulled all the technologies together and we’re able to deliver them in an integrated fashion for a hedge fund manager,” said Rosen. In addition, Concept one will integrate with any front-end system the funds are using if they choose not to use its front end, said Rosen.

"We are bring(ing) best-of-breed technology that would otherwise be cost prohibitive to small and medium size managers,” he said. By outsourcing, “a small and medium size hedge fund can have all the same advantages as the large hedge funds have,” said Rosen. Parts of the system are in use, have been tested and are working quite well, he said. The full suite is going to be available for deployment on March 15th.

The platform will have a multi-prime capability in that it’s going to connect with all the custodians that hedge funds utilize. In fact, Concept Capital acts as an introducing prime broker to large custodians including Goldman Sachs, Bank of New York and J.P. Morgan. Concept Capital provides prime brokerage services—the banks offer their balance sheets and stock loan programs through Concept Capital, which provides the client facing service through technology, but it doesn’t custody any of the assets. The assets are held in custody at traditional prime brokers, explained Rosen,

Based in New York, Concept Capital, is an institutional broker that provides a range of services to hedge funds including middle and back-office services, fund administration, as well as access to fund formation consulting, office space solutions for fund launches and an outsourced trading desk. The firm handles U.S. and international stocks, options, futures and currencies and will offer debt instruments sometime in the future.

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 the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio