York Capital Builds a Better Mousetrap

As chief technology officer at a global, multi-strategy hedge fund manager with more than $12 billion in assets under management, Gary Maier has a lot on his plate in simply keeping in-tune with the day-to-day operations of his trading desk. But for a good deal of the two and a half years that he has been with York Capital Management, Maier has been working on a major project that is about to come to fruition.

Dubbed Y-FI, or York For Information, Maier's big effort is a new internal enterprise portfolio management system. The system, which currently is running in a beta test, leverages a dynamic service-oriented architecture and a Web-friendly, rich Internet application (RIA) front end to deliver a broad set of functionalities across the firm, he explains.

Y-FI, according to Maier, provides enterprise reference data management, including a multi-asset-class security master and a robust account master. It also includes a real-time transaction blotter, real-time positions, risk and matrix pricing facilities, cash management services, a real-time compliance engine, and reporting. "We are putting most of our effort into the mid- and back-office capabilities and improving workflow and the quality of data across different asset classes," Maier says.

Necessity Is the Mother of Invention

"When you're a large, global multi-asset-class/multi-strategy manager as we are, you're trading in almost every asset class and denomination out there -- from equities and fixed income to bank debt -- which can be particularly challenging given the various permutations and current lack of available, standardized data for all but the largest of syndicate deals," Maier says. When trading across so many markets and asset classes, it is hard to find one system to address every need, he adds. "Certainly on the OMS side, it's very difficult, as most of them remain very equity-centric."

York's Y-FI platform, Maier says, integrates vendor systems -- along with its own internal functional and data capabilities -- into a consolidated environment that provides various views and access mechanisms for users across the firm. "This services the firm from front office to mid and back office, marketing, investor relations, and compliance -- and everyone wants to see the data in different slices," he notes.

"First of all, we want to own our data and process, rather than be held captive to or limited by a single vendor's current capabilities or platform. We also want to ensure a best-of-breed mix of functionality," Maier continues. "And within the vendor community there simply aren't a lot of platforms for hedge funds, if any, that bring everything together, especially when dealing with such a diverse product mix that is further intended to service such a broad constituency of users. We therefore felt this was a strategic effort that was well justified."

Maier points out that although the team has built some of the core application functionality, the firm does look to supplement internal efforts with outside vendor offerings, particularly in the commodities area. He adds that work on the project has been ongoing for about a year and a half, with as much as a third of that time spent scrubbing the data.

"York has been in business for 19 years, so there was a lot of legacy data to scrub down, figure out what's missing and get into a form that is consumable for a true enterprise, multi-product security master and portfolio management platform," Maier acknowledges. "Moreover, enhancing workflow and establishing new firmwide processes to ensure the ongoing integrity of the data is just as important as the technology platform, if not more so."

The firm's operations team already is fully onboard with the new system, according to Maier. Other front- and middle-office personnel are pending.

Beyond getting Y-FI fully implemented, what's next for Maier and York Capital Management? "It's an evolutionary cycle, and there will always be demands for new features, new functionality and new asset classes," he says. "As primarily an event-driven shop, we have some ideas about processing tagged news feeds to drive real-time sentiment indicators across our positions, for example."

In the meantime, Maier says, continuing to build out Y-FI and a project to introduce a new accounting engine will keep him quite busy. "Further, I expect regulation is going to be a big area of focus for the industry," he comments. "What impact it's going to have -- from a compliance standpoint, from a pricing standpoint and for risk mitigation, especially for securities where the market is not so liquid -- that's going to be in front of everybody over the next year or so."

Profile: Gary Maier, Chief Technology Officer, York Capital Management

Assets Under Management: More than $12 billion.

Time in Current Position: 2.5 years.

Technology Used to Trade: Eze Castle OMS. All trade information is entered into the order management system and pushed downstream. But, Maier says, on the back end, the team enriches all the data separately. The OMS also feeds Y-FI, the firm's new proprietary portfolio management system.

Size, Structure of Trading Desk: There are five to six traders on the desk for pure execution. The technology team consists of three people, one of whom is dedicated to infrastructure and system administration. Regular consulting resources in New York, London and Hong Kong also provide help desk and local administrative support, and another consultant focuses on documentation. Maier expects to add another three to four people to the technology group in the coming months.